I'm Investing - Now What?

By: Paul J. Meyer
The good news is that there are nearly an unlimited number of ways and strategies to be successful in investing and managing your money. The bad news is that there is an unlimited number of people, businesses, advertisements, magazines, radio experts, and television shows all ready to tell you what they think you should do. But don't despair. Among the many successful ways are some common denominators that all seem to revolve around common sense. Here are my top ten common sense tips for asset management:

Tip #1: Don't fall in love with a stock.
Don't let emotions get involved with your stock - it could cost you dearly. Regardless of any sentimental meaning you may attach to it, it represents a commodity of value only.

Tip #2: Don't buy or sell from a broker on the last two days of a calendar month.

If you don't know your commission-based broker well, put a moratorium on any business during the last few days of any month, when such brokers typically end their production period that determines their paycheck for the following month. Don't risk getting recommendations based more on your broker's need to earn a commission than on your need to make money.

Tip #3: Seek a financial advisor through friends or your company's benefits office.

Brokerage companies often have rookie brokers simply take turns accepting unsolicited calls for advice. This is far too risky. You need to protect your money. If your friends can't recommend one, utilize the due diligence that your company's benefits office has done on the company's behalf and ask them for a referral.

Tip #4: Don't pay for advice you don't need.

There will always be a need for high quality, full-service stockbrokers. However, for the common investor, cost savings are enormous and personal control is greatly improved if you can invest a few hours per week into the powerful research tools and portfolio management applications afforded by free Internet sites.

Tip #5: Fee-based managers can gouge, too.

If you're paying a professional manager a flat fee based on the size of your portfolio, make sure you aren't paying ongoing management fees on the cash portion of your account. It makes sense to pay management fees on the portion that is in stocks and bonds, but never pay additional management fees on the portion invested in money market funds.

Tip #6: Take the best of both worlds.

If you have a complex portfolio and estate, consider paying a professional financial advisor for a specific plan that can be executed and evaluated on your own at a discounted or online broker. This keeps you in control and free to measure performance without any conflict of interest as well as saving significantly on needless fees and commissions.

Tip #7: That's my plan and I'm sticking to it.

Do your research, get outside advice if necessary, and find a core strategy that you can live with long-term. It is the fees, tax liability, and needless short-term losses that can destroy the multiplying momentum of your portfolio over time if you allow yourself to be whipsawed with every new fad.

Tip #8: Life insurance is not an investment. Investments are not life insurance.

Insurance salespeople may try to convince you that life insurance can be used as an effective investment. Stockbrokers may try to convince you that your life insurance premiums are better spent by investing in their investment recommendations. Common sense and good advice will tell you that there is a need for both at some level in every family.

Tip #9: Don't overlook invisible losses.

Invisible losses are those you are taking and not even knowing it. For example, if you are afraid of taking some risk by investing and instead place your money in a bank savings account, you will have had invisible losses by not earning more than you could have. Manage your money, and consider the cost of doing nothing when you make financial decisions.

Tip #10: Keep your perspective.

You own your money - do not let it own you. Always remember where your portfolio ranks in your own personal priorities of life.