Do start now and don't stop. Procrastinating robs
you of time, your greatest ally to achieve your goals. Getting
into and maintaining regular savings and investing habits
triggers "dollars cost averaging" which means
that you buy more units when prices are low and fewer units
when prices are high.
Do select your portfolio carefully. Spread your
risk through diversification. Find the right balance for
you between investments such as bonds and stocks from different
sectors of the economy and different geographic areas in
the world.
Don't ignore the prospectus. The fund company is
legally obliged to give you a prospectus. It tells you all
there is to know about the fund and helps you to determine
if the fund is indeed what the sales brochure or the person
selling it claims it to be.
Don't be afraid to change your investment mix. As
personal or economic circumstances change adjust your investments
to reflect stronger or weaker economic growth prospects
and increased or decreased reliance on your own financial
resources. Focus on the long term rather than the short
term whenever possible.
Do
be careful of market timing. While adjusting your portfolio
from time to time is important be cautious about trying
to time the market. Most fund companies allow you to switch
between funds although some charge a fee. Keep in mind that
experts agree that switching for the sole purpose of trying
to "time" the market is very difficult. Trying
on your own what experts are reluctant to do can be very
risky.
Do consider leveraging. Your funds are doing well.
The outlook for the economy is good. Interest rates are
low. Why not borrow money to buy more funds and increase
your profits? Leveraging offers substantial rewards but
unfortunately also exposes you to significant risks. Whether
or not you should depends entirely on your ability to absorb
losses. Here are a couple of suggestions: don't ever borrow
more than 50% of your original investment, and; leave your
all of your original investment to earn profits and pay
the interest for the money you borrowed from your regular
income.
Do pick a good advisor. With the right advisor you
benefit in many ways. Not only can your financial advisor
guide you through the large number of products that are
available, pointing out the advantages of each, he or she
will also take care of the paperwork associated with your
investment. Managing you investments effectively requires
sound advice, day-to-day portfolio considerations and the
ability to confirm that your investment goals are in sight
- all characteristics of a good advisor.
