Personal
Financial Planning: It’s All About Setting Goals
What does financial planning mean to you
On-line
Banking: Making the right choice for your needs?
Looking beyond the noise for an on-line bank
College
Planning: How to plan for your debt when yiou graduate
Consolidate your debt when you leave college.
Estate Planning & Wills
Making the right choices for your estate
The Key to Investing is Diversification
Tips and Strategies to Effective Investing
Managing Your Credit Report Before
and After You Get Divorced
Implications on your credit report with a marriage breakup
Savings,
tips & tricks to save your money
What are my options to grow my money: from CD's to stocks & bonds
Key
Features for Your Checking and Savings Accounts
Find the best account for your specific needs
Four Key Sources of Income at Retirement
Find the right mix of income sources for your retirement
Looking back on the boom, then subsequent bust, of the market in the late 1990s, the importance of diversification becomes pretty clear. Understand, though, that to diversify is to plan and to be proactive…not reactive. In fact, it is extremely important to practice disciplined investing with a diversified portfolio before diversification becomes a necessity, since by the time an average investor “reacts” to the market, 80% or more of the damage is already done.
This does not mean that the right portfolio is always going to be able to prevent losses (or event soften the blow, for that matter). The key is to think longer-term: a well-diversified portfolio, combined with a three- to five-year investment horizon, will help you as an investor to weather most storms.
Diversification
Tips & Strategies
Equities can be great investments, but you’re going to be most
effective when you don’t put all of your investment in one stock
or even one sector. At the very least, invest in a handful of companies
you know and trust. This may leave you a little bit “retail-heavy”,
but it’s better than just picking a few stocks that “look
good” on a whim.
Index funds and fixed-income funds: Investing in these as part of your ‘mix’ add some long-term diversification, in addition to further hedging your portfolio against market uncertainty and volatility.
Add to your investments on a regular basis, since lump-sum investing is not always the best way to go. For example, if you have $15,000 to invest, use dollar-cost averaging, which involves investing on a regular basis into a specific portfolio of stocks or funds. This will help smooth out the “peaks and valleys” created by market volatility.
Know when to bail. Don’t make your long-term investments your short-term investments gone awry. Yes, buying and holding and dollar-cost-averaging are sound strategies over the long term, but that doesn’t mean that there won’t be times when you should dump a stock. “Long term” does not mean “invest and forget about it”: it’s your money and therefore your responsibility to keep current when it comes to your investments, in addition to the market in general. This includes simply keeping abreast of what is happening in the companies in which you own stock.
Watch those commissions. Ensure that you are fully aware of exactly what you are getting for the fees you are paying. For example, some firms charge a monthly fee, while others charge per-transaction fees. As with anything, keep in mind too that the cheapest route is not always the best.
At the end of the day, remember that investing can – and should be – fun, or at the very least, educational and rewarding. After all, it’s your money – you should do all you can to make it grow!