If there’s one piece of advice that we would like to pass on to newcomers to the world of investing, it’s simply this: blaze your own trail. Far too often we let the financial news outlets control us from start to finish, pretending as if we have to listen to everything that comes out of their mouths. Of course, it’s in their best interest to pull this off. After all, if they have you scared and cautious, they have you under their control. And that means that you are going to be a lot more susceptible to advertising and marketing designed to take money out of your pockets. Now, we’re not going to say that it’s against the rules to make money off investors. That’s kind of the way the world of investing is set up. However, what you do need to understand here is that it’s all about limiting the amount of fees and services that you’re paying for.
Let’s talk about financial gurus on TV — are they really what you want to listen to when it comes down to it? Is there advice really timely? We disagree in theory, actually. Yes, we think that most investors that have a national presence are good investors for their own personal portfolio. But you really can’t time the market, and the trouble is that the hot stock pick circuit is convinced that you can. Just because stocks are taking a beating now doesn’t mean that you sell off everything and move into bonds. If you can stomach a little more risk than someone else, that shouldn’t be seen as a bad thing. It’s all about how fast you want your money to grow, and how much risk that you can tolerate. If you only have 5 years before retirement, we don’t suggest going through the process of high-yield junk corporate bonds. Even though the word is charged, all it really means is that there is a risk that the company won’t pay back the money — depending on the numbers and profile of the company, this can actually be unlikely to happen. But what if it did happen Are you really willing to risk the money that you’ve put towards this effort.
This is why there are so many calls for a balanced portfolio. Because the last thing that you really want to do is find that you don’t have any balance in your portfolio. If you put all of your eggs into the proverbial basket, you’re not going to be able to actually move forward. This is because when there’s a big market swing, your whole portfolio is going to feel it.
Long term, you need to make sure that you’re choosing diversified funds over the “sure thing” that the financial gurus are touting at the moment. No matter how much time passes, there seems to be a new stock darling, or a new technique that’s designed to put lots of money into your account today — just like the last ten or twenty techniques were supposed to do.
Instead of thinking about gimmicks and fast cash, you might want to fall back on fundamental and technical analysis with value investing. Slow growth. These are things that raise portfolios.