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Schulfer & Associates, LLC

5 Determinants of Long-Term Portfolio Success

By LouAnn Schulfer, AWMA®, AIF®

Accredited Wealth Management AdvisorSM
Accredited Investment Fiduciary®

Investing can be complicated and some elements that can determine success are often overlooked.  Here are 5 contributors to long-term success that you should know.

 

  1.  How much you invest.   Like planting seeds.  If you plant one seed, your harvest is certain to be less than if you planted 100 seeds.  Same with investing.  The more you put in, the more you are likely to get out.
  2. How often you invest.  Dollar-cost averaging is making regular contributions on an ongoing basis.  This is common in 401(k) and other retirement plans, where an employee establishes a set percentage or amount to contribute from each paycheck.  Dollar cost averaging allows one to take advantage of down markets by buying low, as well as practice the discipline of regular ongoing contributions.
  3. Length of time invested:  time value of money.  Back to the seed analogy, the longer you let something grow, the greater the likelihood it will grow larger. 
  4. Tax consequences.  Many people underestimate the effects of taxation.  When, how much and what type of taxes you’ll pay on your investments are significant.
  5. Rate of return.  It is said that Einstein called compound interest the eighth wonder of the world, that “he who understands it, earns it. He who doesn't, pays it.”  Point taken.  Also, the larger your investment, the more your rate of return matters in it’s value.  Consider that return comes with risk. 

 

There are several components that determine the long-term success of your portfolio.  I’ve had conversations with people who only focus on rate of return, overlooking the other four.  It’s good to be reminded that the chances of your success for long-term investing can be improved by more than just rate of return.   

 

LouAnn Schulfer is co-owner of Schulfer & Associates, LLC Wealth Management and can be reached at (715) 343-9600 or louann.schulfer@lpl.comwww.SchulferAndAssociates.com

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. 

 

 Member FINRA/SIPC. 

 

Content in this Material is for general information only and not intended to provide specific advice or recommendations to any individual.

 

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

 

Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels such as securities. An investor should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not assure a profit and does not protect against loss in declining markets.