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Further
Reading ...
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Networking: A Team Sport - Leni Chauvin
A couple of years ago, I was scheduled to attend one of my Business Referral Exchange breakfast meetings in a location about 45 minutes away from my home. I'm so used to getting up early to attend breakfast meetings, that I'm rather like a fireman...
The Narrow Path - Jenean Matthews
The Narrow Path By Jenean Matthews Dear Entrepreneur: I'm glad to see you're still on the path to success. Many have begun this journey at the same time as you but have dropped off by the way side. Some were too weary to go on. Some lost hope...
What ARE the Secrets of the Millionaire Mind? - Paul Nadrowski CPA
If you're so smart, why ain't you rich? Becoming a millionaire is not just a matter of book smarts. There is a psychology of wealth. We've all heard the stories of the person who dropped out of high school and went on to become a millionaire after...
Time Management For Home Business Owners - Jason Gazaway
As each day passes, and more and more things need to get done with your business, you may find yourself alittle overwhelmed with how much is left to be done. This is nothing new, and a problem that almost every home business owner encounters. There...
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Find a Methodology and Minimize Investment Madness
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Written By:
Ulli G. Niemann
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There are many reasons to be investing these days, and too much opportunity to not have your money working for you.
However, I believe the majority of people dread having to deal with investment matters, and tend to jump into purchases and then hold their breath hoping for the best. After a long day at work and taking care of the family, it's hard to get excited about reading up on your 401(k) options, Morningstar ratings and fund performances.
If this sounds like you, there are basically 3 choices.
You can have your investments professionally managed, you can continue as you have in the past & keep your fingers crossed, or you can find a methodology that objectifies the investing process (that's buying and selling investments) and helps you maximize your long-term results.
To determine if you need help managing your investments(and this doesn't necessarily mean having to pay for advice) you might want to ask yourself these questions:
=> Do I really have the time and interest to follow the market closely on a daily basis?
=> Have I done well in the past managing my own investments?
=> Do I really want to add another layer of work and responsibility onto an already busy schedule?
If you're like most people, you would answer yes to some and no to others, so how do you decide? If you think you could have or should have done better with your investments, then you need some help. Don't feel bad. Having counseled hundreds of people over the past 15 years I can honestly say that everybody needs some help, whether they are aware of it or not.
Why? This could come as a surprise, but, in fact, your financial life is a lot shorter than your physical life?
Most people who end up investing don't really start working and making money until they are about 25 years old. Considering the average retirement age of 65, this gives you only 40 years to save and invest wisely.
If you make a poor investment decision, such as trying to stay fully invested during a bear market, you could lose big both in terms of diminished dollars and wasted time.
To drive home this important point, let me give you an actual example involving my own portfolio. For ease of illustration I have adjusted the beginning portfolio balance to $10,000.
During the period from 1/25/91 to 10/13/00 my $10,000 investment grew to $37,840, which is a 14.67% compounded annual return.
On 10/13/00, based on a methodology I was following, I liquidated all - continued below ...
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continued ...
of my domestic mutual fund positions and moved 100% to the safety of my money market account. Thanks to this move, my portfolio retained 100% of its value on that date.
As we now know with hindsight, most people held on to their investment positions and have so far lost on average 50% to 60% of the value of their portfolios. For this example let us use 50%.
If I had held onto my position, my portfolio would be down to $18,920. Last time I hit that level on the way up was in 1995.
In other words, not only would I have lost 50% of my portfolio I would have lost even more by having used up 20% (8 years) of my total financial life.
How can you avoid mistakes like that in the future? Spend a little of your valuable research time looking for investment methodologies that allow you to side-step bear markets and let you move back in during bull markets. In other words, invest your time looking at methodologies instead of investments themselves. This will lay the foundation for more effective use of your money and time.
If you find a methodology that you like, and it matches your investment philosophy, stick with it for the long term. It should have the aspect of telling you when to get out of, as well as when to get into, an investment.
I suggest you follow these broad guidelines:
- Don't be afraid to take a small loss to avoid bigger disasters.
- Stay away from commissioned sales people (because they have incentives other than your best interests), and if you use an advisor, be sure he or she is fee based.
- Above all, don't get overwhelmed by news, rumors and predictions that are irrelevant to your strategy.
If you take this advice, I guarantee that pretty soon sleepless nights will be a thing of the past and you'll be on your way to more confidently and successfully (that means profitably) managing your investments.
Ulli Niemann is an investment advisor and has been writing
about objective, methodical approaches to investing for over
10 years. He eluded the bear market of 2000 and has helped
hundreds of people make better investment decisions. To find
out more about his approach and his FREE Newsletter, please
visit: http://www.successful-investment.com.
ulli@successful-investment.com
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| _Additional Resources ... |
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IRS Free File Is Not A Free-For-All - Wayne M Davies
Looking for a way to reduce the cost of income tax preparation this year? Then you came to the right place -- maybe! The IRS has launched a new program this year -- it's called "Free File", and it enables you to prepare and e-file your personal...
Internet Marketing Mistakes that Traditional Business Owners make part 3 - Andrew Clacy
If Internet Marketing is important to you, the third in a 7 part series is a must for Australian Business Owners. The third mistake in Internet marketing is made by business owners who do not follow through with their online marketing with a simple...
How to BOOST and GENERATE more income into your business - Janet L Hall
How to BOOST and GENERATE more income into your business By: Janet L. Hall When was the last time you sat down and reviewed your business plan? Have you ever done a business plan? Today, right now, why not just sit down and write a simple plan of...
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