Financial discipline takes practice. Remember wax on…wax off? Like The Karate Kid getting ready to give his show-stopping moves, smart investors practice, practice, practice to set themselves up for financial success.

One fundamental way to practice financial stability is to use Dollar Cost Averaging (DCA). DCA is a strategy that invests set amounts at planned intervals, no matter the current position of the market. Using this measured approach, you control how much you invest without reacting to market volatility. Part of your investment success is the ability to resist the urge to sell based solely on how the market moves. Over time, even with expected market downturns, your financial discipline using DCA and a diversified portfolio will help you build financial security.

Your practice continues by making sure you are diversifying your investments. A broad mix of ventures will help a prepared investor get through economic slumps. Having a diversified portfolio happens by knowing what investments you own and rebalancing your portfolio as needed. Over time, assets that have risen in value will become a larger portion of your portfolio. By rebalancing your portfolio, you ensure that your financial success is not too concentrated in one area and will maintain your strong position even in turbulent times. A downturn in the market is a good reminder to revisit your financial plan with your advisor to ensure that your disciplined practices are creating success. A long-term investor does not need to be fearful of changes in the market because their prepared strategy will pay off over time. However, investors who are getting closer to retirement may need to add or reassess defensive assets to ensure more stability.

Another practice that will grow your financial stability is to accumulate cash. Raising capital during turbulent times helps in your defensive position in several ways. By having resources in cash, this portion of your assets is protected when the market dips. These cash sources are also helpful to buy stocks when the market is low. Having some cash on hand will keep your position more flexible so that you are ready to buy when the right opportunity comes along. Cash and cash equivalents (such as Treasury securities, other U.S. government bonds, and other short-term bonds) will help steady your portfolio when inevitable market dips occur.

After all of this financial practice, you will be able to know that your performance over time will be one that would make Mr. Miyagi smile. Well done!

Key Takeaways

· Discipline and diversity lead to success

· Know what you own and rebalance as needed

· Accumulate cash for increased stability and flexibility

Justin Martin is a Senior Wealth Advisor for Legacy Wealth Management, with his office based in the Salt Lake City area. Justin works with small business owners and doctors throughout the United States and is passionate about helping individuals prepare for a robust financial future. Justin completed his Master of Business Administration (MBA) at Texas A&M University and completed his undergraduate studies at Brigham Young University. Justin is FINRA series 65 licensed, has been working as a Wealth Advisor since 2006, and is currently a board member with the International Association of Registered Financial Consultants. He also works as an adjunct professor of microeconomics and loves studying financial systems. Justin and his wife Megan have four kids and love all things active and musical.

This document is provided for educational purposes only. All investment strategies have the potential for profit or loss. No investment strategy can guarantee positive returns. The information contained in this document should neither be construed as a provision of personalized investment advice nor as a guarantee that a certain level of results will be achieved. Under no circumstances should this information be construed as an offer to sell or a solicitation of an offer to buy any particular service or product.

Source: Justin Martin