It's Labor Day, which ironically enough, means that many people are taking the day off work.
But if you're like most people, you spend most of your days working hard. And if you're going to achieve your long-term goals, such as a comfortable retirement, you'll want your money to work hard for you too.
What can you do to keep your money gainfully employed? Here are a few ideas:
* Invest for growth. Many people make the mistake of investing too conservatively. Of course, the stock market will always fluctuate, and some price drops can seem frightening.
Yet if you try to "play it safe" by investing strictly in conservative investments, such as bonds and certificates of deposit (CDs), you could be taking another type of risk: the risk of losing purchasing power. That's because fixed-income investments may not provide a return that keeps up with inflation. To really have your money work for you, then, you should include at least some growth-oriented investments, such as stocks, in your portfolio. You can't eliminate the risk of losing principal, but you may be able to reduce it by purchasing quality stocks and holding them for the long term,
* Don't take "vacations" from investing. If you want your money to continually work hard, don't give it a vacation.
Yet that's just what many people do, especially following an event that is commonly perceived as detrimental to the financial markets, such as a war, a corporate or political scandal or a spike in oil prices.
But in the past, the markets have always rallied, even after the most disturbing news. And while it's true that past performance is not a guarantee of future results, it's also true that investors who stop investing for a while, as they wait for "things to get better," generally earn poorer returns than those who have stayed invested, through good times and bad,
* Take the emotion out of investment decisions. It's been said that fear and greed drive the markets. In other words, investors sell stocks with their prices are down because they are afraid of further drops, and they buy more stocks when the prices are high in the hope of earning even more profits. In other words, their emotions cause them to do the opposite of the most famous piece of investment advice: Buy low and sell high. Don't make these mistakes. Your money will work harder for you if you invest it in a careful manner, based on your individual needs, goals and risk tolerance, and
* Review your portfolio regularly. To make sure your money is, in fact, working hard, you'll need to check on it from time to time. That's why it's a good idea to have regular portfolio reviews, preferably with an experienced financial advisor. Over time, your needs may change, or your investments themselves may evolve in a way you hadn't anticipated. If these things happen, you may need to make some changes to your portfolio so that you can take advantage of new opportunities.
By following these suggestions, you can help your money work for you in the years and decades ahead. And, as is often the case in life, hard work can bring good results.