Time is on Your Side - Fall 2005

Patience and discipline allow investors to enjoy superior returns. Many investors are touchy about long-term commitment when choosing a fixed-term investment. Their reasoning is simple: if rates go up, they can easily move their money into this higher-rate investment. If, on the other hand, they have committed to a five-year term, they miss out on a potentially amazing rate.

While it's hard to avoid the temptation of chasing short-term rates, it can be a thankless job with little payoff.

"Clients can spend a lot of time and energy waiting for better rates and still miss out on making the most of their investments," says Dan Steinkey, Director of Investment Products at Rice Financial. "In most cases, your money will do better in a long-term investment."

Long-term thinking also helps weather market conditions. Rather than running after the latest investment fad or worrying about a short market downturn, long-term investors keep their eye on the end goal, alleviating a lot of headache. Meanwhile, a rate-chaser can easily get caught up in these events - deliberately moving investments around to avoid market damage and to reap short-term rewards.

"The peaks and valleys are par for the course—they will always happen," says Steinkey. "Keeping your money in a long-term investment allows you to remain comfortable while the market plays itself out."

Instead of spending time predicting what the market will do next, leaving your fixed term investments over a five-year term will guarantee the best GIC interest on your money and be far less of a headache.

"It shouldn’t be your full-time job to watch the market—that’s up to market analysts and your advisor," says Steinkey.

Of course, there are circumstances when a short-term investment is the best choice—as you save for a major purchase, for example. However, today’s rates on high interest savings accounts match a short-term GIC. To find out which long-term investment strategy is right for you, talk to your Rice Financial representative.