Take a Look Around
Whether you are just starting to think about investing or have worked at it for years, you need know where you stand and where you want to go. Those who are just getting their feet wet should spend some time researching different kind of investments, and setting long-term and short-term goals. If your employer supports a 401(k), enroll and make extra contributions when you can. In the case that your employer does not support a 401(k), set up an IRA, and commit yourself to investing regularly in it.
Once you have your investment foundation, that is your retirement account, set up, you can look for other ways to supplement your financial future.
Make Diverse Investments
An insightful post on investopedia.com recommends that you make diverse investments. It says, “invest in conservative stocks with regular dividends, stocks with long-term growth potential, and a small percentage of stocks with better returns, along with higher risk potential.” The advantage to making an array of investments is that if one investment goes sour, it doesn’t make your whole portfolio stink.
Review and Rebalance
Your asset allocation may change as market conditions fluctuate. Regularly review which of your investments falls into each category —growth stocks, higher risk, etc. You should want to keep a certain percentage of your investments in each category, so if that percentage shifts over time, you should take the time to rebalance your portfolio. The link in the previous section offers more advice on how to diversify and allocate investments.
Invest in Help
Oftentimes one of the wisest investments you can make is in other people, like experts whose careers center on knowing and working with financial trends. Since 1998, Fortress Investment Group has worked to help people stay on top of their investments. A prominent member on their board of directors, Pete Briger, is a seasoned expert. Pete Briger’s resume explains his work in the field and how he dedicates time to helping others.
If you find that one or more of your investments starts to slide downhill, do not immediately assume that you need to make a change. It will drive you crazy, and making constant adjustments may cost you more money in the long run than it will save you. As one blog puts, it, “Too much issue is made of short-term returns, and it’s easy to feel depressed about the returns we’re seeing over the last few years.” Over time, stock market returns tend to smooth out.
Think about the reasons that might be behind any downtrends in the market. Listen to the experts and decide if you think those reasons will keep causing issues down the road. Once you make a careful consideration of all factors involved, take action (or take no action by waiting it out).
Managing investments might seem intimidating and confusing, but the important things are to empower yourself with knowledge, get help when you need it, and keep cool.