The document provides tips to avoid common investment mistakes. It lists 6 mistakes to avoid: letting emotions run wild, investing in something not understood, becoming too attached to a company, unrealistic expectations, trying to time the market, and failing to diversify. It then gives steps to develop an investment plan including determining goals and seeking advisor help if needed. It stresses maintaining a long-term consistent strategy, monitoring investments, and adjusting the portfolio over time based on life stages. It also recommends setting up a small "play fund" to allow for riskier investments as long as it's limited and comes with rules. The overall message is to commit to an investment plan and follow best practices to successfully build a portfolio.
2. 6 MISTAKES YOU SHOULD AVOID
IN INVESTING:
1. Letting Emotions Run Wild
2. Investing in Something You Don’t Understand
3. Falling in Love with a Company
4. Unrealistic Expectations
5. Attempting to Time the Market
6. Failing to Diversify
3. Develop a Plan of Action
Determine what your
goals are and how
much you need to
invest to get there. If
you don’t feel
qualified to do this,
seek a reputable
advisor.
4. Develop a Plan of Action
Find one who will work
for a fee and who does
not receive incentives to
sell you high-commission
products and will explain
to you the rationale for
choosing one investment
over another.
5. Develop a Plan of Action
Do not expect your
portfolio to make you rich
overnight. A consistent,
long-term investment
strategy over time is what
will build wealth.
6. Systemize Your Plan
As your income grows,
you may want to expand
your portfolio. Monitor
your investments, review
them and their
performance over a fixed
time frame you
determine.
7. Systemize Your Plan
Evaluate whether
your equity-to-fixed-
income ratio should
stay the same or
change based on
where you are in
life.
8. Set up a “Play Fund”
We’re all tempted to
take a bigger risk and
“gamble” sometimes.
So, instead of trying to
fight it, go with it. Set
aside your “fun
investment money.”
9. As with any game,
there are rules: You
should limit this
amount to no more
than 5% of your
investment portfolio.
Do not use
retirement money
Set up a “Play Fund”
10. Be prepared to lose
100% of your
investment; and
ALWAYS set a pre-
determined limit to
determine when you
will walk away (Stop
Loss).
Set up a “Play Fund”
11. Commit To It
Investing mistakes are
part of the investing
process. Knowing
what they are, avoid
committing them,
develop a thoughtful,
systematic plan and
stick with it.
12. Commit To It
Follow these
guidelines, and you
will be well on your
way to building a
portfolio that will
provide many happy
returns over the
long-term.
