October 22nd, 2010

Becoming a Self-Aware Investor

Regardless of where you are in life today, becoming a truly self-aware investor is perhaps the most effective way to understand exactly what you need to do now to prepare for the future. Fortunately, achieving financial self-awareness is not hard to accomplish.

Assess Your Attitudes and Actions

It’s not uncommon to develop habits or attitudes that can contribute significantly to financial success or difficulties over the years. Take a moment to reflect on a few of the financial high points and low points you’ve experienced in your life. Did you make specific financial decisions that affected your outcome? Why? Were you too confident? Full of uncertainty? Or were you well prepared and poised for success?

Focus on the positive and ask yourself whether your day-to-day financial values and habits are consistent with your priorities for the future. Consider retirement planning, the sooner you fully embrace good financial habits — calculating yearly goals, contributing as much as possible to a retirement account, and maintaining an appropriate investment mix — the more secure your long-term future could be.

Maintain Realistic Investment Expectations

One of the keys to maintaining an appropriate mix of investments is selecting an asset allocation that has the potential to help you pursue a specific financial goal without exposing your portfolio to an inappropriate amount of risk. For example, by including some bond investments together with stock investments, it may be possible to lower overall portfolio risk without significantly reducing return potential.

Once you’ve allocated your assets, it’s important to maintain realistic expectations about the type of short- and long-term returns you might expect to earn, based on historical trends. This way you’ll be in a better position to stay focused on your long-term goals while taking any short-term market swings in stride.

For questions about this article or more information on how to plan for your retirement, call our Financial Services team at 206.398.5707.

This article is not intended to provide specific investment or tax advice for any individual. Consult your financial advisor, your tax advisor or me if you have any questions. Securities Offered through LPL Financial | Member FINRA/SIPC – Not NCUA Insured | No Credit Union Guarantee/May Lose Value | LPL Financial is not affiliated with the credit union.

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