Have you ever searched for a financial product or investment vehicle, only to get sidetracked by all the financial advice that you find in the headlines of your search?
While we’re not here to discredit the useful, yet highly opinionated articles (and dare I say, sponsored content) written by the so-called ‘experts,’ we’re here to tell you, that when it comes to investing, simply having some common sense, may do much more for your investment strategy than trying to keep up with the never-ending influx of financial advice available on the web.
Have a Plan
Those who invest with no strategy are simply putting themselves at a disadvantage. While investing itself is a smart move, doing so without a plan can have a negatively adverse effect on your finances down the road. If you’re planning to invest, consider organizing and writing down your financial goals. This will help you determine how much time you have to invest and what are the best investment vehicles to help get you there. Active investors should also assess their current investments at least every year to determine if they are on track to reaching their desired goals.
Know Your Investments
Would you buy a car without knowing the specifications of the model, nor the breakdown of the deal being offered to you? I hope your answer is, no. Then why would you invest without fully understanding what you’re signing up for? Every investor, whether it’s their first time, or they’re advanced in the game, needs to understand exactly what they’re investing in. Don’t be afraid to ask questions until you can discern for yourself if the investment is right for you. American businessman and investor, Peter Lynch said it best, “Know what you own, and know why you own it.”
Patience plays a vital role when it comes to successful investing. Prosperous investors will tell you it’s one of the most important factors in building your wealth. You see, whether you’re investing in stocks, bonds, or real estate investment opportunities, time can do wonders for your money. Just look at the power of compounding. A $30,000 limited partnership investment with Jakob Pek Fund, invested for 20 years at a rate of 5.5%, will grow to $87,532.72 with no additional contribution. If you can learn to sit patiently during the ups and downs of financial markets and concerning economic news, patience, can most definitely pay.
Keep Emotions At Bay
When it comes to investing, prepare to leave your emotions out of the mix. For those of you who follow your ‘gut’ when making decisions, learn to ignore it. Emotions can get in the way of making wise moves with your money and put your financial well-being at stake. Fear and greed are said to be the two most common emotional reactions to the stock market, causing irrational investors to make dire (and often terrible) investment decisions. Keep in mind investing requires patience. So, look past immediate gratification (or panic) and use your logic.
The best way to stay focused on reaching your financial goals is to actively monitor your investments. Now, this doesn’t mean you need to check your portfolio while drinking your morning coffee, but rather track your investments periodically, or more frequently as required with complex investment strategies. For those who rely on their financial advisors, consider monitoring your investments more closely to ensure your money is being handled properly and on its strategy trajectory. Keep the focus by staying abreast and informed.