My garden consists of years and years of perennial purchases at the end of season rates. The plants, having received the proper care and attention, have grown substantially surrounding my home with a beauty that takes my breath away. I believe that investors have the same expectations with their investments.  When the decision is made to invest, the investor feels confident that with proper care and attention their principal will grow substantially.  The investments do require proper care and attention which can certainly help protect your investments but just as a water ban, bad soil and Mother Nature can affect the growth of a garden there are some unexpected factors that may affect your investments as well. 

The proper care for your investments involves time, objectivity, attention and most of all, patience.

It takes time to sort through all of the information separating fact from emotion.  In the age of technology, if we look long enough we can find information to support any stance we wish to take…..put your money all in growth, the market has hit bottom….go into cash the market has only begun to decline.  Research, allocating assets, economic reports and all of the other complexities of investing takes time to decipher and analyze.  A great deal of time is needed to nurture, cultivate and care for your investments properly.

Objectivity is key to the success of a portfolio.   It is difficult to be objective in your personal situations.  Some of  the questions to consider include these:  What is the purpose of the funds?  What is the timeframe for the investment?  How much are you willing to lose?    To be as objective as possible you must be honest and consider both best and worst case scenarios.  Objectivity is crucial since your answers will influence the allocation of assets and the formulation of the financial plan. 

One of the most common things I hear is that investments were selected and “just left alone”.   Much like a garden needs attention such as watering and pruning, your investments need attention as well.  If your portfolio is ignored many things can occur.  Assets may be allocated by percentage, such as, 10% per holding.  If neglected, those percentages can become askew and perhaps one holding will represent 45% of the portfolio, increasing your risk for loss should there be a dramatic decline in that particular investment.  In addition, should the entire portfolio decline 50% and your $500,000 becomes $250,000, a simple calculation will prove that you must double your portfolio to recover completely.  How long do you think that might take? Attention is essential to endure market conditions and protect your investments.

My garden did not grow overnight.  As I stated, it took years and years for my garden to flourish.  It took plenty of planning, planting and patience.   Investments are no different.  To expect results in a short period of time is unrealistic.  Remember, normally there will be fluctuations in prices, increasing and decreasing in value.  One of the most difficult things for investors to withstand is seeing the market decline.  How patient should you be?  The price to sell should be determined when investments are first established, allowing your ability to exercise patience to increase tremendously.

Not everyone has the interest or the ability to devote themselves to give proper care to their investments or their gardens for that matter.  Life is busy for all of us and thankfully, there are professionals to help us with both.  I am a true believer that communication is necessary to the success of any relationship.  Therefore, when hiring your investment professional stay involved, understand the methodology used for your investments, keep your investment professional informed of changes in your life by communicating openly and clearly.  The time, objectivity, attention and patience that is put into the process of investing will be more apt to create the returns necessary to achieve your financial goals.  You can then reap the benefits that your financial plan produces. 

By Barbara Case

Barbara Case is the Senior Vice President of Investments at Moors & Cabot Investments in Boston. Honored as a South Shore Woman of the Month--- for always giving back--- Barbara is now giving advice to the SSW community in her new financial column.