9 Essential Tips Every Investor Should Know

Financial professionals offer advice for market-watchers young and old

Have a clear purpose and defined expectations.
Quite often, people believe they are investing to earn a “maximum” return, or to beat the market—neither of which is true, says William Pitney, president and CEO of San Francisco Bay Area financial advisory firm FocusYOU. He suggests laying out a clear investment purpose and expectations before jumping into the market. For example, if you are investing for retirement, plan for where your portfolio needs to be 20 to 30 years in the future. You will likely live in retirement 20 years or more, so your portfolio must outpace inflation so you can afford to live. Reacting to short-term market fluctuations, no matter how dramatic, will only hamper your long-term success. “Most people have a very personal reason for investing that usually has to do with more than just the money,” says Pitney. “For some, it is about achieving financial independence and maintaining their own sense of dignity and self-worth. For others, it is about expressing love for their family and community.”

Look at investment fundamentals like you do weight-loss.
As anyone who’s tried to shed pounds can attest, the basics are simple to understand, says Pitney, but not easy to achieve. After all, everyone knows how to lose weight by eating healthier and exercising more. Putting that advice into action isn’t always as easy as it sounds. Similarly, says Pitney, “everyone knows that to succeed at investing you need to buy low and sell high, diversify your holdings, and focus on the long term. However, study after study shows us that investors do the opposite and it has cost them dearly.” Similar to a good diet plan, investors should create a plan that sets clear goals, monitors progress, and connects with an outside support group if the do-it-yourself approach isn’t working. If you need help breaking bad habits, don’t be shy about reaching out to a professional financial planner.

Remember, it’s not how much you can make, it’s how much you get to keep.
As anyone who’s tried to shed pounds can attest, the basics are simple to understand, says Pitney, but not easy to achieve. After all, everyone knows how to lose weight by eating healthier and exercising more. Putting that advice into action isn’t always as easy as it sounds. Similarly, says Pitney, “everyone knows that to succeed at investing you need to buy low and sell high, diversify your holdings, and focus on the long term. However, study after study shows us that investors do the opposite and it has cost them dearly.” Similar to a good diet plan, investors should create a plan that sets clear goals, monitors progress, and connects with an outside support group if the do-it-yourself approach isn’t working. If you need help breaking bad habits, don’t be shy about reaching out to a professional financial planner.

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