When it comes to investing, there are some rules that
function more like suggestions. Then, there are others that are absolute musts,
commandments if you will. Even if you think you know everything there is to
know about investing, familiarize yourself with the investment commandments,
and do NOT stray from them.
Commandment #1: Thou Shalt Diversify
It is very rare that every investment you choose will pay
off, just as it is (thankfully) very rare that every investment you choose will
tank. However, since there’s a very good chance that some investments will go
great while others won’t, it’s always, always smart do diversify your
investments.
Spread your money across many different types of investment
opportunities, including things like stocks, real estate, bonds, and more. When
you diversify, you cut your overall risk and pretty much guarantee that you’ll
never face a situation where all your investments fail at once.
Commandment #2: Thou Shalt Rebalance
In the investment world, it’s important to never get
stagnant. After all, the investment scene is always changing, so it just makes
sense that your investments should change over time too.
At least once a year, sit down and look over your portfolio.
Get rid of investments that aren’t
performing well, and check to see if you have too many investments in one
category or another. Also ensure that your investments line up with your
overall goals, and get rid of the ones that aren’t serving your purposes.
By selling off unnecessary and/or unfruitful investments,
you can gain the money you need to buy smarter, more relevant investments for
your needs and thus continually strengthen your portfolio.
Commandment #3: Save and Spend Smart
Saving money is always important, even (and especially!) in
the investment world. Save money where you can by engaging in money-saving
strategies, like going through an online discount broker, working with a
financial adviser who knows the ropes, and/or choosing low-fee index funds or
no-load funds.
Also, spend your money wisely! Take advantage of dollar-cost
averaging, a strategy whereby you avoid buying too high (or too low) by
regularly investing the same amounts in the same investments or types of
investments.
So, there you have it- the rules you must follow for successful investing. Armed with this knowledge, you’re now
ready to get started!
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