DO : Cook up a logical investing strategy.
- With a financial advisor, create a strategy that is a good match for your personal situation. If you wanted to make a special dish for dinner, you wouldn’t just throw ingredients in a bowl at random and expect it to magically become a meal. Finances work in a similar fashion.
- Asset classes are like ingredients: they should be combined in strategic proportions. Your personalized investment plan is like a recipe: there are some overall guidelines to consider (like diversification), but it should be seasoned to taste. If you like your food spicy, you could add extra chili powder. If you have a higher risk tolerance, you might consider allocating more of your portfolio to stocks than to bonds.
DON’T : Bet on the media darlings.
- Financial markets are very efficient at assimilating information. Finance isn’t about fortune telling with a crystal ball, it’s about asset allocation and smart, long-term planning. So don’t try to play guessing games and beat the markets by predicting the next big thing from the daily headlines. Instead, aim to have a balanced basket of stocks as part of your overall portfolio.