Before we invest anywhere
Well, you say you are ready to invest on your own. No stockbrokers, no financial advisors, just you and the open market. What an exciting prospect. Wait, are you seriously considering this offer?
Please allow me to offer some advice: don't do it. I speak with some experience, losing my fair share in the "open market" as a do-it-yourself investor. The odds of success in this type of investment are equal to the odds of winning the lottery. This is a crapshoot. Unless you're willing to take the time to investigate, investigate, and then do some investigation. Successful investing is not just the prerogative of stockbrokers and financial analysts. It is an open field for voluntary participation from any field to life. The catch here is that you have to be knowledgeable, or you will lose.
Take the time to understand all the components of the investment sector before you risk losing your nice little nest egg in ten minutes or less. What you've spent a lifetime saving can be reduced in as little as ten minutes. Now, this must be a scary thought for any sane, rational investor.
If you still intend to invest alone, here are some tips and guidelines to help ensure your success. If you are going to invest, at least hire some sort of investment professional to advise you. This doesn't necessarily mean letting them invest, but use common sense here. They know things you don't know, and they don't have time to learn.
Another piece of advice: If it sounds too good to be true, it is. Hands down, dream investing doesn't exist. If you know someone who has acted on a friend's good advice, you can bet that someone worked hard for that information, and it probably won't produce the mega returns promised.
Walking through the financial maze of stocks, bonds, and mutual funds can be quite a challenge. American Century Investments offers the following tips to give you the know-how on building a profitable portfolio.
* Know your goals. Consider how much money you’ll need for your children’s education or your retirement. Whatever your vision for the future might be, set your goals and develop a concrete plan for meeting them.
* Define your investment time horizon. If you’re not planning on retiring anytime soon, you might want to have a portfolio that includes more long-term investments. If retirement is just around the corner, consider a more conservative approach.
* Determine your risk tolerance. Figure out your risk comfort level and compare that with what you can afford. In general, the longer you have to invest, the bigger risk you can take.
* Consult a professional. To avoid financial pitfalls, later on, it is often wise to seek professional guidance when putting together a portfolio.
“Recent research shows that investors continue to grapple with some of the most basic investment concepts, suggesting a greater need for financial advice and guidance,” said Doug Lockwood, a certified financial planner.
To help investors meet their financial goals, American Century Investments has developed On Plan Investing, a program designed to help investors build and maintain diversified investment portfolios – at no additional cost.
Combining educational tools, advice, market insight, and investment products, On Plan Investing helps investors develop a personal investment strategy, whether they are new to investing, seeking guidance but still want control over their investment mix, need help positioning their portfolios with a long-term perspective or need help understanding how the markets work.
It would help if you were patient while investing. Investing is like saving; it takes time to accumulate real returns. Don't panic; take the time to step back and look at your investments and market indicators objectively. Panic will cost you money. With patience, something about the investing process should be read on your part. If you're going to invest, take the time to learn the process, learn how to read the prospectus, how to calculate a healthy business, and differentiate it from a turning business. Your knowledge will be your ticket to successful investing with a show of real returns.
It can be done; it is done every day by people like you and me. You need to understand the enormity of the commitment required to be a successful investor.
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