Investing is a process that takes time, should be thoughtfully monitored and has a better chance of success if planned out. Regardless of what stage you’re at in your life and even if you’ve started investing, making a plan and sticking to it will benefit you. Keep the following tips in mind as you start, or restart, your investing journey:
Tip #1- Get Started. If you haven’t started investing in various vehicles available to you, meet with your financial advisor to determine which ones meet your investment goals and timeline. You’re not limited to just choices at your employer.
Tip #2- Make a Plan, a Financial Plan. Part of the process is having a financial plan completed, and then redone every 2-3 years to help keep you on track. Financial plans are great because they are like a ‘story book of your retirement story’. Seeing your information in writing keeps it ‘real’ versus just discussing it.
Tip #3- Stick to IT! Stopping and starting on investing can hurt you and slow progress towards your financial goals. Even if your financial situation changes, at least continue to invest minimally regularly. Continue to monitor investments through the ‘peaks and valleys’ of your life.
Tip #4- Diversify. Know your own tolerance to stock market ‘ups and downs’. Understanding that different asset classes behave differently than others, will help you and your financial advisor develop a portfolio that can withstand changes.
Tip #5- Monitor Portfolio Risk. In other words, “don’t put all of your eggs in one basket”, as the saying goes. Continually monitor the risk in your portfolio as you age, and adjust as necessary.
Tip #6- Monitor Personal Risk. Continue to insure yourself and your family against health and property related catastrophes. The fastest way to have to liquidate investments prematurely is by not having protection in place to offset your financial risk.
Tip #7- Ignore the Media. When the press talks, the masses listen; unfortunately. Markets can be driven by emotion created by media. Stick to your plan and ignore what you may be hearing. Besides, selling in a down market (bear market) and buying in an upward trending market (bull market) is really the opposite of what you should be doing.
Tip #8- Manage Debt. If you keep your debt in line, there is more that you can invest each month. Managing debt means not carrying balances and paying fees and high-interest rates.
Tip #9- Account for Taxes. Every investment plan should account for taxes, especially when liquidating assets and when entering into retirement. Utilize a tax professional to understand how your investments will affect you now and going forward.
Tip #10- Rebalance at Regular Appointments. No investment should be left on ‘auto-pilot’, and portfolios can become ‘out of balance’ as shares increase and decrease in value. Consider rebalancing after your regular appointment if your portfolio needs adjusting to reflect your financial goals.