Setting a financial goal, whether it is retirement, a home
purchase or anything else that requires a disciplined investment
program, is not an easy goal to achieve. However, there are some things
that investors can do to ensure that they achieve their goals with as
little effort, stress, and disappointment possible. Here are five things
every investor can do to make the process much simpler.
1. Invest regularly. Rather than make a single, lump sum contribution to your
investment account on an annual basis, make your contributions once per
month or, better yet, every time you get paid. You can usually set up a
pre-authorized contribution program with most mutual fund companies, for
example, and this not only makes it easier from a budgeting angle but
also allows for the concept of dollar-cost-averaging to work to your
advantage.
2. Review your investments every quarter. It may seem like a bit of chore, but unlike some of the more tedious house chores that get done once per week (or more often), a quarterly review system is actually not much of a chore at all. Reviewing your quarterly statements allows you to make sure your investments are trending the right away... and if they are now, you are better able to take proactive and corrective measures before any problem spirals out of control.
3. Establish an appropriate asset mix and stick to it. Rather than chasing the hot and popular asset classes, establish a strategic plan and stick to it. If that means trading out of hot classes and reinvesting in less popular assets when the prices are depressed, then owning the less popular shares will yield impressive results of their own. It is important to never chase the popular assets.
4. Use professional investment services where possible. Whether you invest 100% in mutual
funds or actively managed exchange traded funds, or you rely on
professional management for those specialty areas with which you are
less familiar, make sure that you use professional investment services
and do not overwhelm yourself with too much of a task, particularly if
your investments are not your full-time employment. Most services are
relatively cheap but more importantly they have the resources necessary
to ensure your investments are handled properly.
5. Measure performance against a benchmark as well as your own personal goals. While professional money managers are measured against benchmarks to determine their annual bonus, your investment goals much also come into play for your own portfolio. While you may have outperformed a particular index or benchmark, if you are still falling behind in terms of reaching your goal, you may need to evaluate and adjust your asset mix and risk tolerance to accommodate for greater long-term returns.
By following these five recommendations, independent investors will find they have not only greater success, but are better in tune with whether or not they will achieve their financial goals.
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| Free Investment |
2. Review your investments every quarter. It may seem like a bit of chore, but unlike some of the more tedious house chores that get done once per week (or more often), a quarterly review system is actually not much of a chore at all. Reviewing your quarterly statements allows you to make sure your investments are trending the right away... and if they are now, you are better able to take proactive and corrective measures before any problem spirals out of control.
3. Establish an appropriate asset mix and stick to it. Rather than chasing the hot and popular asset classes, establish a strategic plan and stick to it. If that means trading out of hot classes and reinvesting in less popular assets when the prices are depressed, then owning the less popular shares will yield impressive results of their own. It is important to never chase the popular assets.
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| Investment Free |
5. Measure performance against a benchmark as well as your own personal goals. While professional money managers are measured against benchmarks to determine their annual bonus, your investment goals much also come into play for your own portfolio. While you may have outperformed a particular index or benchmark, if you are still falling behind in terms of reaching your goal, you may need to evaluate and adjust your asset mix and risk tolerance to accommodate for greater long-term returns.
By following these five recommendations, independent investors will find they have not only greater success, but are better in tune with whether or not they will achieve their financial goals.
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