There’s nothing wrong with making money slowly because when you do, you tend to listen to good money advice when you hear it. You treat your money with the care and thoughtfulness it deserves because your family depends on it, and money does bring happiness. Don’t let anyone tell you otherwise.

In my conversations with you, we talk about keeping what you’ve made, and as you get older, we have conversations about reducing your exposure to stocks. There comes a point when it’s more about return of assets than return on assets. But understanding that and taking action to prepare your portfolio to reflect it is a different matter.

It’s been my experience that investors who understand what you just read are far more open to making portfolio adjustments compared to investors who do not.

You may or may not be surprised by how little attention is given to some simple tenets of investing, such as diversification, patience, and compound interest. So much time and effort is spent looking at prices. “What did the stock market do today?” is the common refrain as opposed to “How much interest did you earn today?”

Unfortunately, it’s only after the losses take hold that investors realize they have a problem. “Now what?” they ask themselves. “Do I hang on and wait for it to come back?”

When you make money slowly, you tend to avoid big risks, hoping one or two stocks make your dreams come true. Maybe they do. Maybe they don’t. But it’s impossible to ignore the simple arithmetic of losses if they don’t.

History has shown that a balanced portfolio helps smooth out the performance.

Action Line: When you’re ready to talk about return of assets rather than return on assets, let’s talk. I’ll know you’re serious. Email me at ejsmith@yoursurvivalguy.com.

Read the entire series here.

Originally posted on Your Survival Guy.