The question the many exchange traded fund (ETF) investors have is “Is the worst over?” Rather than focus on this, accept that the future is unforeseeable, and keep your investment portfolio ready for anything. There are certain things to do that can prepare your investment portfolio for a market decline. Ron DeLegge for ETF Guide has three strategies that can help, and we toss in some of our own thoughts, too.
1. Avoid Financial Immaturity. This is a state of financial apathy that can keep you from growing and moving forward. You must examine your attitude and your hang-ups with money and investing to determine if you are own worst enemy. DeLegge says the 3 aspects are 1) Having behavioral disorders counterproductive to successful investing; 2) Having limited or no education about the realities of successful investing, and 3) Having a distorted investment philosophy or having no investment philosophy at all.
What you can do: Wise investors educate themselves about the markets and how their investments work. You don’t have to be all-knowing about every ETF out there, but do be all-knowing about what you’re personally investing in.
2. It’s Not Play Money. Treat your money like you care. By becoming knowledgeable about what you are investing in and why, there can be no accidents. Many investors have been burned by being too casual.
What You Can Do: Take it very seriously. Be prepared with a strategy so that there is no guesswork involved. By having an entrance and an exit strategy and by adhering to a discipline, the losses can be kept to a minimum.
3. Stay Aware. By becoming lazy, inattentive or apathetic about your investment portfolio, you are putting yourself at great risk. The power lies in yourself to follow market trends and be aware of what is happening within the economy. By having an investment philosophy and taking this serious, you can be prepared for obstacles that come your way. And keep losses to a minimum.
What You Can Do: Wise investors constantly learn from their mistakes and seek out new information. The world is changing rapidly, and investors need to evolve and get stronger along with it by continuing their education, acquiring new skills and disciplines and applying lessons learned.