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Tips for the Successful Investor
From the editors at WIFE |
There are volumes written about how to
become a successful investor, and the advice is often quite complex.
Here are some common-sense tips that will improve your investment success, no matter what
your level of financial sophistication.
1. Come early to the party, and stay late. Begin investing as soon as you can, be
patient, and let time shower your investments with compound growth.
2. Keep adding to your investment stash. Each month, invest as much as you can
afford, and increase your monthly investments whenever you can.
3. Spread your investments around. Invest the money you'll need soon in very
liquid investments, but when investing for the long-term, invest as much in stocks and
equity mutual funds as you can.
4. Cut the IRS off at the pass. Invest as much as you can in tax-deferred
retirement plans, such as 401(k) plans. Your money will grow faster and you can afford to
invest more now because you won't have to pay taxes on the money until you retire.
5. Don't let the bears get you down. Abraham Lincoln once said "When you
have got an elephant by the hind legs and he is trying to run away, it is best to let him
run." The same thing is true of bears - don't panic and sell low. Let the bear market
run its course, which history tells us is likely to be short.
6. Keep your balance. Once you have decided how much to invest in each type of
asset, rebalance often to your original percentages, particularly after a large market
shift, upward or downward.
7. Don't expect miracles. Your investment decisions won't be right all the time,
and some of your funds will underperform your expectations. But as you rebalance and weed
out consistent underperformers over the years, you will generally achieve a reasonable
overall investment return.
8. Buy-and-hold, don't cut-and-run. Don't change mutual funds every year to
acquire last year's hot performer. It may be a flash in the pan, and to buy it you may
dump a good long-term investment, tossing it from the frying pan into the fire and missing
the sizzle altogether.
9. Think before you leap. Don't buy an investment without analyzing it carefully.
Options, futures, and start-upven-tures are all gambles. You may want to take an
occasional fling on such investments, but do so with money you can afford to lose.
10. Ask the experts. Seek professional help if you need it. As the loads
(commissions) on mutual funds shrink, professional advice is no longer expensive. Even if
you are a do-it-yourselfer, consider a periodic checkup with a financial adviser to hone
your portfolio's performance.
The Women's Institute for Financial
Education (WIFE) is a non-profit organization which provides financial education,
networking opportunities, seminars, and workshops for women of all ages. |
