If you are one of those people that just leave your finances to fate or professionals because you operate in a fog about the stock market, your retirement accounts and investments. This information is for you.
You have a full time job, family, outside commitments and much more pulling at you. So you stack up your brokerage statements, information and someday you will get to it. Sound familiar to many of you? It is a very common scenario and all too common. If your doctor mailed you something regarding a recent visit, you would not stack it up. If it were information regarding your children at school, health or other problem, you would address it quickly. So why are our finances put on the back burner? Usually it is lack of knowledge on what to do and how to act on the information.
If you invest your money there are some basics to be aware of. First and foremost it is your money, NOT the brokerages. You define the risk, not them. Many people have an online brokerage account for trading or they control their retirement accounts, but still manage even that very passively. When you are paying for services of a stock broker or financial advisor the foregone conclusion of meeting your goals is assumed. Which should not be the case remember they make money regardless if you do.
Success with your Finances
So what should you do to insure success with your finances? Review your accounts, regardless of the type of account..retirement (401K or IRA), education, personal growth etc… it should be under scrutiny. Know your timeline and expectations by setting goals and reviewing the progress to obtain those goals regularly.
If you have kids leaving for college in 10 years, will the account grow enough? If you want to buy a new house or pay your home off in eight years, can you achieve that with the current returns? Once you establish the goal be sure the movement is forward to get there, if it is not pull the plug. Most investors and traders are afraid of losing money so they do nothing once things are going sour. Instead of doing nothing have a plan before you enter, then you aren’t making decisions under pressure or when you see your money disappearing. The easiest thing to do is nothing, that is also the worst thing you can do. Stick to your plan and hold yourself accountable for achieving the goals.
Now that leads us to reading those brokerage statements. All this seems easy if you hold one stock, an exchange traded fund (ETF), but what about a mutual fund? How do you manage that. Well you hold the same standard for mutual funds. They have charts, they have gains/losses, expected growth or risks. Hold them accountable and if the fund is not performing pull the plug. There are thousands of funds, some perform well and others do not. Keep track of the allocation of the fund and does this make sense to you when it comes to your goals. Make sure you are thinking of what makes sense for your risk tolerance. In the climate our country is in you want to avoid certain risky area’s so KNOW what you are invested in to avoid that risk.
Find a fund, which is easy to do with the internet that is doing what you expect for your money. If you are investing yourself hold yourself accountable. Be sure you are diversifying, stretch yourself to find what is working. Which sectors underperformed and out performed in the past year or quarter. Find area’s that have growth potential. Which sectors lead the market and watch for them to turn and make your decisions. You can’t expect to time tops and bottoms of the stock market, but you can be realistic.
Nothing rises forever and nothing falls forever. Greed dictates many decisions and never be afraid of missing things. Be more afraid of become greedy, keep your goals in mind and that never goes forever. If you have money on the table to profit from a move, it never hurts to take some of that off the table and look for other opportunities.
Do Your Research
Take the steps to learn about the markets, there are online sites, books, magazines and individual instruction available. As an investor you must first determine what you can handle and if you want to be in charge or hand that over to a broker. Remembers brokers make money regardless of your gains you pay them. Hedge fund managers also charge fees, so does it make more sense to find a fund that ONLY makes money if you do? Does it make sense to find away to invest yourself in area’s you are comfortable with? It really seems difficult to learn about the market, but really it is just a set of words, discipline and skills that anyone can pick up with the dedication to do so.