Learn about proper asset allocation. This is the practice of making sure all of our eggs aren't in the same basket. This reduces risk and can increase our returns over time.
2. Avoid high fees
Don't buy investment products like annuities or mutual funds without knowing what fees we'll be paying. Shop for a broker or financial services company with reasonable fees. High fees will erode investment returns by a Large amount over time don't pay them.
3. Ignore headline news
Most finance news is produced for daily consumption. Getting wrapped up in these short term market headlines is a big mistake. Reacting to daily news can lead to buying at the top or selling at the bottom of a market cycle.
4. Know what you're buying
Know what the company does and be able to explain it to anyone in simple terms. This way, when market forces change or competition increases, we will be in a better position to understand the risks of continuing to hold our original investment.
5. Some risk is necessary
In order to insure a reasonable return on our investments some risk is necessary. Keeping our savings in only stocks means we lose big when the market turns down. The opposite is true if we keep all of our savings in CDs and bonds. Large market moves up will be missed; we'll run the risk of not getting high enough returns to accumulate the savings needed for a secure retirement. Everyone has a different comfort level, balance your portfolio the way that is best for you. See you next week Finwiz.
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