GET EDUCATED ABOUT INVESTING

If you have children at home, you’re no doubt aware that it’s the traditional back-to-school time. But even if your days of parent-teacher conferences are in the past, or even in the future, you can still find a place in your life for education — and you might want to start by educating yourself about investing.

To get the most out of your investment education, ask yourself these questions:

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• What are my goals? Your financial goals should drive your investment decisions. You probably have short-term goals, such as making a down payment on a home or paying for a vacation, and long-term goals, such as saving for your children’s college education or building resources for your retirement. Once you’ve identified your goals, you can create an investment strategy to help achieve them.

• What is my risk tolerance? Self-awareness is important in every aspect of life — including your approach to investing. As you create your investment portfolio, you need to understand your own views on risk. Would you consider yourself an aggressive investor — that is, someone who can accept a relatively higher degree of investment risk in exchange for potentially higher returns? Or are you a more conservative investor — someone who is willing to take lower returns in exchange for lower potential risk? Or perhaps you’re a moderate investor, less risk-averse than some but less aggressive than others. However you’d characterize yourself, it’s essential that you factor in your risk tolerance when choosing investments. Otherwise, you’ll likely end up causing yourself needless worry over your investment portfolio’s performance.

• When should I make changes to my investments? Once you’ve built an investment portfolio, you shouldn’t leave it on “autopilot.” Over time, you most likely will need to add new investments or sell others. However, try to avoid selling quality investments just because their share price has dropped — they may still have good long-term prospects. In general, you should sell an investment under certain circumstances. For example, if your goals have changed, you may find the need to sell some investments and purchase others. You may decide to sell an investment if it’s no longer what it was when you purchased it. For example, maybe you’ve invested in a company whose products are less competitive than they once were, or perhaps the company belongs to an industry now in decline. And finally, if your portfolio has become “overweighted” with certain types of investments, you may decide to sell some of them to bring your holdings back into balance, based on your goals, risk tolerance and time horizon.

• Whom should I consult for help? You can do a lot to educate yourself about investing — but when it comes to making the right choices for your future, you may need help. A professional financial advisor who is familiar with your family situation, short- and long-term goals and investment preferences can help you build and maintain a portfolio that can help meet your needs. The investment world can be complex, so the more knowledge you have on your side, the better off you’ll be.

Take the time to learn as much as you can about investing. It’s an education that can pay off in the long run.