We all need to invest for the future, but making the right choices can be overwhelming unless you’re a financial professional. Whether you choose to purchase stocks and bonds, contribute to a retirement account such as a 401(k), or even invest in real estate, there are rules to investing wisely. While complicated investment jargon can give you a headache, following these 7 rules of investing will help put you on a path toward reaching your goals.
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 potential 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.
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. Invest For The Long Term
You may want to check financial tasks off your to-do list in a hurry, but remember, investing isn’t a race. It will take time for you to reach your goals, and if you go in with that mindset, you may see more growth and can celebrate the small victories along the way.
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. Avoid Unnecessary Risk
All investing involves risk, but that doesn’t mean you just cross your fingers and hope for the best. The level of risk you take should correspond to your age, time horizon, and goals. Your portfolio isn’t the place for speculation or bets, and your plan should reflect your risk tolerance.
6. 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.
7. Broaden Your Investments
It’s drilled into us pretty regularly that we need to diversify our portfolios. Since investing is never a guarantee, you may want to consider investing in various formats and companies to help 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.
Rules To Live (Or Invest) By
Investing doesn’t have to be complicated, and it doesn’t have to scare you. If you want to pursue a positive investment experience and implement these tips into your investment strategy as you pursue your financial future, our team at Comprehensive Advisor would love to help. Email us at info@ComprehensiveAdvisor.com or call (760) 813-2125 to start taking control of your money and stay informed about your investments.
About Brett and John
Brett Gottlieb is the founder of Comprehensive Advisor and a financial advisor with nearly two decades of industry experience. He graduated from California State University-Chico with two bachelor’s degrees in Business Administration and Economics. Brett is Life Insurance licensed in several states.
John Mc Kean, financial advisor, joined Comprehensive Advisor in 2016. He has been in the financial services and retirement planning industry for over six years. John is Life Insurance licensed in California.
Brett and John previously worked as Registered Representatives with Securities America, one of the largest independent broker/dealers in the country, and currently offer advisory services through AE Wealth Management, LLC. Both are passionate about educating clients on retirement planning. They take a common-sense approach to the planning process and work with clients to create a retirement road map to help ensure their assets are protected and they receive the income needed to enjoy their future. Based in Carlsbad, California, they work with clients throughout San Diego County. Learn more by connecting with Brett on LinkedIn or email them at info@ComprehensiveAdvisor.com.
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Comprehensive Advisor are not affiliated companies. C.A. Financial & Insurance Services, CA Ins. Lic. #6000262. This material is intended to provide general information and is believed to be reliable, but accuracy and completeness cannot be guaranteed. 518316