Sunday, August 3, 2008

102 Personal Finance Tips Your Professor Never Taught You (Part 7)

Investing

65. graphBe stock Beware of mutual funds. Few mutual fund managers can beat the market and expenditures as the costs they charge.
66. Do not try to choose stocks. Picking stocks can be very dangerous game, unless you know what you're doing.
67. Avoid fees. With the long-term investment, costs are a primary factor in the total return. Avoid brokers who take high commissions and avoid funds with high management costs.
68. Inventories are high-risk, high reward. In the long term, stocks have always outperformed all other investments. But in the short term, they may be at risk if they lose a lot of value in a short period of time. So, invest do with stocks, but only with funds, you will not need to withdraw in the short term.
69. Shares in the first place, bonds later. Investing in stocks when you're young, then move Bonds did you grow up. The stocks are a good long-term investment strategy. If you are still young when the market turns south, you have many years left before you to make it up. As you get more, invest in bonds. They are less risky.
70. Past performance is no guarantee of future success. Just because a stock has been in place for the last six months does not mean that it will continue to go up tomorrow.
71. Diversify your portfolio. Never invest more than 10% of your portfolio in the same company. Even if it is a "sure thing".
72. Building a nest egg that is 25 times the annual amount of investment income you need. Do not think you can rely solely on social security.
73. If you do not understand how an investment, not buying it. Search an investment vehicle thoroughly before you get into it.
74. Do not borrow from your 401 (k). Think of it as you fly. You will hit with duties and taxes, too.
75. Invest for the long term. There is no guarantee of get rich quick scheme. And investment, there is no reward without a high risk. Be careful and diversify your portfolio over the long term.
76. Seek professional help. Do you not feel the need to transform yourself into a day trader. Arrivals a financial advisor if you can afford.
77. "Fee-only" is your friend. Go with a single tax, financial adviser, not a fee or commission basis. Only costs only advisers are legally required to act in your best interests.
78. The index funds are your friend. Are passively managed index funds and are generally less costly and more efficient tax that funds actively managed.