The holiday season is special for a number of reasons, but the opportunity to spend time with loved ones is clearly near the top of the list. As investors, one of the more difficult parts of the season is figuring out how to step away from the markets and maximize this time with friends and family. Do you have a plan of attack?
4 tips to keep you focused
The holiday season is a time for getting together with family and focusing on all of the blessings youâve had over the past year, while preparing for the challenges youâll face in the coming year. As an investor, one of the more difficult aspects of the holiday season is trying to carve out time with family, without putting your portfolio at risk. While the markets may close on a handful of days during the season, itâs still kicking the rest of the time. Here are some things you can do to maximize your results.
1. Consider rebalancing your portfolio
Long-term investors donât have to worry about stepping away from their portfolio for a couple of days, but short-term investors might want to think about rebalancing their portfolios as they enter the holiday season.
Not only do you want to avoid getting stuck in a compromising situation, but itâs also possible that your portfolio has become unbalanced throughout the year as various markets have grown at different paces. Restructuring now, as opposed to January when the markets inexplicably seem to rise each year, could be beneficial.
2. Set up protections
âFor stocks and exchange-traded funds, setting stop-loss orders can allow you to give instructions to your broker that will automatically sell them if they fall below a certain price,â investment expert Dan Caplinger writes. âThe goal is to set a maximum loss you're willing to endure and to protect yourself from even worse losses.â
Donât get too carried away with stop-loss orders, but these protections do provide peace of mind if youâre the sort of person who constantly worries about sudden dips and spikes.
3. Avoid big investments
The goal of mutual funds and hedge funds is pretty simple: (1) maximize the return for investors, and (2) bring in more investor capital.
âTo accomplish the second goal, many funds engage in what is called âwindow dressing,ââ financial consultant Michael MacDonald explains. âThey tend to make big changes in their portfolios just before the end of the year in an effort to alter what investors see and make the fund look as attractive to new investors as possible.â
Keeping this in mind, you should be wary of making any large investments at the end of the year. What youâre seeing isnât always tied to fundamentals. In many cases, a sudden surge in perceived value is nothing more than window dressing.
4. Stay away from screens
Practically speaking, use your time away from the office to rest and recharge. This means taking a break from screens â including laptops, computers, phones, tablets and TVs.
Whether you realize it or not, your eyes, neck, back and mind are all suffering from constant exposure to screens. A couple of days away can promote some much needed physical healing and mental rest. Youâll notice a difference upon returning to the office after the holidays.
Making the most of the holiday season
Donât let another holiday season go by where you unsuccessfully manage family and work. While itâs hard to achieve balance during these busy weeks, you stand a much better chance of finding some equilibrium if you have a plan. The tips and techniques outlined in this article should help you make some headway.
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