By Dave Coen
When it comes to the financial world, things can get complicated very quickly. If you Google “investment principles,” you are going to get an exorbitant amount of advice, some of it even contradictory. So how can you tap into the secret of investing with the overload of information out there? How do you invest in a way that will help you build wealth smarter?
Here is what I believe to be 7 simple rules in real terms. Rules that, if followed, could result in a better investment experience.
1. Manage Your Emotions
Behavior is a major factor in investment success. By being aware of your emotions and knowing your behavioral pitfalls, you can avoid many investment mistakes caused by panic. Finances are an integral part of our lives and it’s difficult to separate them from our emotions, but your nest egg will thank you if you can learn to take your time when making decisions and stay strong and committed when the market feels like a roller coaster. Keep your panic at bay and you’ll sleep better at night—trust me.
2. Stay Away From Predictions
Wouldn’t it be wonderful to have a crystal ball to predict where the markets will go or what the economy will do? Unfortunately, it’s not that simple. Don’t worry about what you can’t control, but channel that energy into focusing on the factors you can impact, such as the types of companies or funds you invest in and how much you save. On that same token, don’t make your investment decisions only based on past performance. Just because a mutual fund blew everyone away last year doesn’t mean it will thrive this year.
3. Don’t Try To Beat The Market
In investing, the long term is what matters. While a select few mutual funds might outperform their benchmarks in any given year, over time we see that this outperformance usually doesn’t last. No matter how hard they try, even the most highly educated and experienced financial analysts have no way of knowing what the markets will do on any given day. While we may hear stories of people who have found incredible success through the stock market, those who accurately time the markets are very lucky and very rare, and those who follow all the “ups” also have to follow the “downs.” If you want to see growth in your portfolio through the stock market, stick to your investment strategy and ignore the short-term noise.
4. Control What You Can
It’ll be easier to stay committed to your long-term plan if you control what you can and let go of the rest. That’s why it’s important to clarify your goals, needs, and time horizon and design a plan tailored to your unique situation. Having an investment philosophy and strategy will give you purpose when hard times come. Your reason for investing could be to save for retirement, put aside money for college tuition, or save for a down payment on a home. Knowing your purpose makes the journey more meaningful.
5. Start Early
Since investing is a marathon, time is on your side. The longer you allow your money to sit in an investment account, the more time you’ll have to reap the benefits of compound interest. Don’t save investing for the future when you feel more prepared. Each year you wait means you’ll need to save more in a shorter amount of time.
6. Diversify, Diversify, Diversify
It’s drilled into us pretty regularly that we need to diversify our portfolios. Since investing is never a guarantee, you want to invest in various formats and companies to reduce your risk of loss. That way, if a company goes down or an industry tanks, you don’t lose all your money at once.
7. Don’t Do It Alone
Even if you watch the market news every day, you’ll still benefit from working with a seasoned, objective financial professional who has helped countless people through every market environment. You won’t regret getting help to put together a proper plan that addresses every part of your financial life. If you want to pursue a better investment experience and implement these tips into your investment strategy as you pursue a secure financial future, I’d love to help. Get started by emailing me at dcoen@sageviewadvisory.com or calling 800-814-8742.
About Dave
Dave Coen is a Financial Advisor with SageView Advisory and the CEO of College Planning America. Along with his retirement financial industry experience, he is a College Planning Specialist. He works closely with individuals and families to provide comprehensive financial planning that addresses all elements of their financial picture. Learn more by connecting with Dave on LinkedIn.
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This material is designed to provide accurate and authoritative information on the subjects covered. It is not however intended to provide specific legal, tax, or other professional advice. For specific personal assistance, the services of an appropriate professional should be sought. A diversified portfolio does not assure a profit or protect against loss in a declining market.
SageView Advisory Group, LLC is a Registered Investment Adviser. This report is for informational purposes only and is not a solicitation to invest. Advisory services are only offered to clients or prospective clients where SageView Advisory Group, LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future results. No advice may be rendered by SageView Advisory Group, LLC unless a client service agreement is in place. CA insurance license #0G82578
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