Investing can seem daunting for beginners with little knowledge of the financial markets. However, with the right guidance, anyone can start investing in a sensible way. Edward Jones, one of the leading investment firms in the US, aims to help individuals make sense of investing through ongoing education and personalized guidance. In this article, we will explore the basics of investing and how Edward Jones makes investing understandable for its clients.
Understand core concepts like risk, return and diversification
Investing entails putting money into assets like stocks, bonds, mutual funds etc. with the aim of generating returns. However, this also involves taking on risk i.e. the potential for loss. The higher the potential returns, the greater the risk. Diversification across asset classes and securities helps reduce risk. Understanding such core concepts is the foundation of sensible investing. Edward Jones advisors explain these concepts and help clients choose investments aligned to their risk appetite.
Start with an appropriate asset allocation
Asset allocation simply means deciding how to divide your investment across asset classes like stocks, bonds etc. It is a key factor in determining investment returns and risk. Edward Jones uses tailored asset allocation models to help clients arrive at a diversified portfolio suitable for their financial situation and risk tolerance. This takes the guesswork out of investing.
Focus on the long term
Patience and discipline are essential in investing. Edward Jones preaches a long-term approach to investing as opposed to speculating based on short-term market movements. It encourages clients to stay invested through ups and downs. A long investment horizon helps smooth out short-term volatility.
Keep costs low by minimizing fees
High investment fees can significantly eat into returns over time. Edward Jones aims to keep clients invested in low-cost funds. Their fee-based pricing structure also aims for cost transparency. Minimizing costs improves net returns over the long run.
Rebalance periodically
As some investments appreciate faster than others, the portfolio asset allocation can drift over time. Edward Jones helps clients rebalance periodically to maintain their target allocation. This forces one to ‘sell high and buy low’, enhancing portfolio returns.
Edward Jones simplifies investing for its clients by promoting basic principles like diversification, long-term focus, and low costs. Its personalized guidance helps investors build sensibly allocated, low-cost portfolios aligned to their goals. This educational approach makes investing less intimidating and more rewarding.