Know the difference between futures and options, know the effects of currency manipulation on foreign investments; understand interest rates, dividends, capital gains, leverage, vesting, margins, premiums, volume–you get the idea. After you feel like you have a pretty good sense of the course layout, move on to tip [You must be registered and logged in to see this link.].
Have A Strategy – Do you know the difference between a Collar Strategy and a Calendar Spread Strategy? Are you a value investor? Do you believe that past performance is a reliable indicator of a given stock’s value? Finding the right strategy will allow you to invest within your budget and achieve your investing goals.
A financial advisor can help you make sense of the various strategies and help you select the one that’s right for you. Of course, you can always dive into the market without a strategy, but you’ll probably wish you had one when the tide inevitably changes. Set Goals, Stick To Them – Wealth, like Rome, is not built in a day. It takes brains, a few lucky bounces, and no short supply of patience. Sit down with a financial advisor and set a list of realistic goals. Write them down.
Read them often. Reconsider them at times. But whatever you do, don’t deviate from your goals at the first patch of rough water. A well-thought out, proven strategy can help you set achievable goals, an advisor can help you stick to them, but in the end it comes down to you to see them through.
Don’t Bet The House – When our back is against the wall, we often ask ourselves, ‘What have I got to lose?’ Well, depending on your investments the answer could be, ‘a lot!’ If a fund declines in value, it’s the fund’s job to recover! The last thing you want to do is try to compensate for an underperforming stock.
If you have a strategy then that strategy should carry you through market downturns. Stick to the plan, stay within your budget, and if all else fails, see a financial advisor before you bet the house on a wing and a prayer. Play Golf, Go Fishing, Learn to Cook – Investing, like Fantasy Football, has a tendency to become all-consuming. Unlike Fantasy Football, investing doesn’t have an offseason.
So, find some separation from the market and keep your perspective. Remember, you’re investing because you want the financial freedom to do the things you love. So, don’t let the market keep you from living the life it’s meant to support.