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Newsletter
2013 5th Edition (Other Editions)
RULES BY WHICH TO INVEST
Now, with your insurance protection in place, you are ready to look for the best investment opportunities. Simple rules to follow:
- Keep a rainy-day fund
At least three months' worth of expenses in a money market account.
If investing in stocks and bonds keeps you awake at night, get out of the market. It is too easy to panic at the wrong time if these investments just feel too risky for you.
- Buy and hold your securities investments
Do not try to time the market. Do not panic during downturns if you have done your homework on your investment choices.
- Don't act on casual advice
Do not look over the shoulder of the next guy for investment ideas. He is no more likely to be right than you are. Like fishermen telling tales, other investors are far more likely to tell you of their successes than of their failures.
- Diversify your holdings to reduce risk
Do not allow yourself to have too many eggs in one basket. Each type of investment has advantages, and disadvantages. A balance of investments will provide peace of mind and a better return.
- Have realistic goals
Do not expect extraordinary wealth to be achieved through investments. Unwarranted expectations encourage people to jump in and out of investments.
- Start saving early
Unleash the power of compounding interest. Encourage your children to save early, too.
No matter how much research you or an advisor might perform, an investment might do very poorly for reasons that you could not anticipate or control. This cause might be a political event, technological development, lawsuit, threat or act of war. The only protection is diversification - not putting all or most of your eggs in one basket.
Source: Financial Planning Consultants, Inc.