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Thanks to technology, stock market updates are available as they happen. If one of your stocks crosses a set value threshold, your phone may be able to alert you via text message. If the stock market takes a dip or surges upwards, you may be prompted to check the effects of that shift on your portfolio.
But being constantly connected to the short-term happenings of your investments has the potential to backfire. If your knee-jerk reaction to every change is to buy or sell stocks, you could easily trip yourself up.
Selling a stock for a quick profit, for example, may cause you to miss out on potential long-term gains of that stock down the road. And habitually buying and selling may increase your transaction fees. Finally, shorter-term buying and selling may increase taxes you owe on capital gains, which in turn impacts the overall value of your nest egg.
If you’re looking for a well-balanced model for potential success, consider purchasing investments you see as having potential to build your wealth over the long term. Then, be patient and give your investments time to reach their potential. You can consider monitoring your investment performance and following industry news, but try not to let day-to-day fluctuations of an investment push you into a quick buy or sale. If a company and industry is performing well, then the price may follow, and you want to be well positioned for the potential rewards.
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This information is provided for educational and illustrative purposes only.
Wells Fargo Wealth Management provides products and services through Wells Fargo Bank, N.A., and its various affiliates and subsidiaries.
Wells Fargo & Company and its affiliates do not provide legal or tax advice. Please consult your legal and/or tax advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your taxes are prepared.
Investing involves risk, including the possible loss of principal. Stocks offer long-term growth potential, but may fluctuate more and provide less current income than other investments. An investment in the stock market should be made with an understanding of the risks associated with common stocks, including market fluctuations.
Asset allocation does not assure or guarantee better performance and cannot eliminate the risk of investment losses.
Past performance does not indicate future results. The value or income associated with a security or an investment may fluctuate. There is always the potential for loss as well as gain.