Successful Investing: 10 Tips for Successful Investing

Investing for most people can seem confusing and complicated, the financial industry ensures that it remains so for their benefit. Most people rely on financial advisers or mutual funds sales representatives to handle their investing needs, they of course benefit from this and would like to keep their clients confused and in the dark. Mike @ The Oblivious Investor recently discussed how the industry benefits from investors confusion. However investing does not have to be complicated, investing can be simple if you just follow a few rules.

1. Have an Investment Policy Statement
We have discussed the importance of having a written investment policy statement. An IPS will be your guide to investing and will keep your emotions out of investing.

If you want to learn more about investing, check out Excess Return and download a great free Investment Guide E-Book!

2. Proper Asset Allocation (Mix of bonds, stocks and Cash) and Diversification
According to studies asset allocation accounts for about 90% of your portfolio volatility, ensure you have the proper asset allocation for your risk tolerance and diversify across different asset classes.

3. Buy Low Cost Index funds or ETFs
Investors can get confused by all the various investment vehicles available, the most common and widely used vehicles are Mutual Funds, however these can be expensive for investors. Best strategy is to purchase low cost index funds and exchange traded funds (ETFs).

4. Ignore the Noise
Everyday analysts and economists make predictions, estimates and give their view on how things will go, the media covers these reports extensively. The problem is that more often than not these reports are contradictory and confusing to the investors. Conclusion: Just ignore the noise.

5. Know What You Invest In
When it comes to investing best advice is to invest in things you know. If you do not understand the investment stay away from it. Performance chasing is always a dangerous strategy since most professionals can not beat the chances are you won’t either.

6. Contribute Regularly
Contributing on regular bases to your portfolio is a great way to build wealth. Often it can be hard to make large lump sum contributions, dollar cost averaging is a great strategy. Just take a small portion of your pay check on regular bases and contribute it to your investment plan.

7. Review Regularly
Markets are volatile, they are up one day and down another day. These market movements will cause your asset allocation to shift, so you need to review your portfolio on regular bases to ensure you rebalance things. Do not overdo it, annual reviews are perfectly fine.

8. Make changes as needed
Things change; you grow older and closer to retirement, you will have children, get a raise/promotion etc. Your portfolio should not be static and needs to change as your circumstances change. Make changes as needed.

9. Avoid“Exotic” investment opportunities
There are many “exotic” investments available but these have not been time tested and can blow up any day, these exotic investments were the main cause of the recent financial collapse. Keep things simple with stocks, bonds, ETFs, index funds and Mutual Funds there are ample opportunities in these.

10. Ignore Market Ups &Downs
As stated earlier; markets are volatile and will have its swings the best thing is to ignore them. Nobody can predict what will happen in the short term, but history has taught us that over the long term markets move upwards.

Investing can be very simple if you follow these rules; however the industry and media try to create the illusion that investing and wealth creation is complicated and requires professional help.

Any tips you would like to add?

Want More FREE Finance Tips?
Like what you just read and want to get more great content from Financial Highway? Just enter your email address below and you'll automatically get Financial Highway posts sent straight to your inbox.
We hate spam just as much as you

Comments

  1. says

    Ray, great tips! Keeping it simple is always the best advice for your investments, unless you can find significant amounts of time to do research and due diligence on the businesses. One of the best advice I have heard about investing in stocks is to not look at it as a stock that you are buying. Think of it as a business you are acquiring and than consider whether the business offers enough value (in terms of price) and profits to make it a worthwhile acquisition. Of course, to be able to do this, one will need to know the company and its operations very well.

  2. says

    One overall tip is to just know yourself and your own situation. Conventional wisdom may not always apply to everyone at every time, so it’s always best to do some of your own research and not leave things completely up to any financial advisor. Even if they truly do possess expert knowledge and skill at acting on it, they are looking after many many other clients as well, not just you. At the end of the day, only you care about your own money.

  3. says

    Great set of solid tips that should be the basis for all home investors.

    I think #10 is most important for maintaining your sanity – personally, I only check the markets about once every month.

    Slow and steady wins the race…

  4. says

    Thanks for sharing such great post, according to me make a proper analysis of sectors where you want to invest and also see the compatibility and the profitability of that sectors is the perfect way to invest. The professional attitude of investment is like you should invest for long term and don’t follow the crowd.

  5. says

    Thanks for the tips, very useful and practical.”When it comes to investing best advice is to invest in things you know.” That tip stuck with me as I read your blog. Thanks again and take care!

  6. says

    Another great blog! I enjoy reading your posts, they’re very insightful and helpful.

  7. says

    ya i totally agree that it will surely help many people to invest successfully, according to me don’t follow the crowd and always diversify your stock is very much essential.

  8. says

    I would also tell people that they shouldn’t go it alone. Find someone that you trust who can help guide you through the financial maze. You’ll be better off in the long run.

  9. says

    For one reason or another, I cant see all of this article, it keeps hiding? Are you using java?

  10. randoh says

    am grateful for these wealth creation manual, investment in long term instruments like stocks must be understood and conclusively decided as the journey of life itself….

  11. says

    I agree with what you are saying. These tips are very helpful for potential/veteran investors. You should know your investment but you should also know where your money is being invested in. It may be something you disagree on. For example, labs where animals are mistreated and such.

Trackbacks

  1. [...] article on investing that’s brought to you by the Financial Highway. Check out these 10 tips for successful investing — no more excuses, it’s time to get started with your investment program! Some great [...]

  2. [...] article on investing that’s brought to you by the Financial Highway. Check out these 10 tips for successful investing — no more excuses, it’s time to get started with your investment program! Some great tips [...]

  3. [...] no magic to investing; anyone can do it as long as you follow simple rules. Previously we published 10 investing tips to become a successful investor to help DIY investors. Although there is no magic to investing if you are a new DIY investor you [...]

  4. [...] to investing; anyone can do it as long as you follow a few simple rules. Previously we published 10 investing tips to become a successful investor to help DIY investors. Although there is no magic to investing if you are a new DIY investor you [...]

  5. [...] Successful Investing: 10 Tips for Successful InvestingJul 23, 2009 investment tips, how to invest successfully. Tips on how to become a successful investor, follow these [...]

  6. [...] Successful Investing: 10 Tips for Successful InvestingJul 23, 2009 investment tips, how to invest successfully. Tips on how to become a successful investor, follow these [...]

  7. [...] Successful Investing: 10 Tips for Successful InvestingJul 23, 2009 investment tips, how to invest successfully. Tips on how to become a successful investor, follow these [...]

  8. [...] & DIY: There is no need to pay high fees to other’s to manage your money, just follow these 10 tips for successful investing and you’ll be fine. You can also open a Discount Brokerage account (see 5 Tips to Choose the [...]

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>