Commandments of Investing
GOLLIHUGH FINANCIAL SERVICES
4 DUNNINGTON COURT
SPRINGBORO OHIO 45066
937-748-4504
COMMANDMENTS OF INVESTING
Investing is a lifelong journey. The following “commandments” will enable you to achieve your goals regardless of your situation and your objectives. The following investment related commandments are the basis for planning, goal setting, and discipline necessary to achieve your goals.
These commandments can keep you focused and enable the achievement of your financial goals.
1. SAVE----Saving is the basic requirement of a successful investment program. However, it is a step many Americans find difficult to take. For some people saving is a natural inclination, but most have to work at it. Once the habit has been established in your mind saving can be relatively painless.
2. PLAN----An investment program cannot be successful unless you have investment plan. The plan need not be complex. With time and experience your plan can be refined to include guidelines about targeted rates of return, asset allocation, investments selection, estate planning, etc. A successful plan will also give you a sense of purpose and ensure greater confidence in your ability to accomplish your financial goals.
3. LEARN---Successful investing requires an individual to understand the basic principles of investing.
These basics can be acquired through a combination of study and experience.
An investor may choose to work with a trusted professional or become a “do-it-yourself” investor.
Regardless of the path you choose, your chances of becoming a successful investor are enhanced if you have the basic skills and understanding of investing.
4. DIVERSIFY---Investors greatest disappointments have resulted from failure to diversify their portfolio. A concentrated investment can make you wealthy. Of course, the more likely outcome is an investor may lose all or a substantial portion of their original investment.
The most accepted asset allocation is a mix of stocks,
bonds, and cash.
The mix of stocks, bonds, and cash determines both the
returns you earn and the risk you experience.
Successful investing means finding the right balance of risk and return.
5. KEEP EMOTIONS IN CHECK ----Fear and greed are the culprits behind many of the worst investment decisions. The markets often provoke strong emotional responses that can undermine a sensible long-term investment plan. Investors also may be distracted by media commentary and news about financial markets.
To be successful, investors must keep their emotions out of their investment decisions.
6. MONITOR YOUR INVESTMENT ----You don’t need to obsess about your portfolio. For many, that kind of intense focus is usually not considered to be a productive means of increasing your portfolio.
However, it is sensible to assess the progress of your investment program and rebalance your holdings to match your targeted asset allocation. There are both simple and complex methods for monitoring your holdings, depending on the investment you have selected.
7. KEEP COSTS DOWN----Low cost is the most reliable predictor of high returns. Everyone wants higher returns. Fewer people pay attention to cost. Cost and return on your investments are directly linked. The best strategy for maximizing your investment returns are keeping costs to a minimum.
8. BECOME TAX EFFICIENT----Your goal should be to maximize your after tax returns, and not to minimize your taxes. No investment decision should be made based only on the tax consequences. However, the current favorable tax treatment of dividends and long-term capital gains can be a valuable asset to investors.
Also, prudent investors should be aware of the advantages of using loss to offset capital gains as well as the benefits of “ capital loss carryovers”.
4 DUNNINGTON COURT
SPRINGBORO OHIO 45066
937-748-4504
COMMANDMENTS OF INVESTING
Investing is a lifelong journey. The following “commandments” will enable you to achieve your goals regardless of your situation and your objectives. The following investment related commandments are the basis for planning, goal setting, and discipline necessary to achieve your goals.
These commandments can keep you focused and enable the achievement of your financial goals.
1. SAVE----Saving is the basic requirement of a successful investment program. However, it is a step many Americans find difficult to take. For some people saving is a natural inclination, but most have to work at it. Once the habit has been established in your mind saving can be relatively painless.
2. PLAN----An investment program cannot be successful unless you have investment plan. The plan need not be complex. With time and experience your plan can be refined to include guidelines about targeted rates of return, asset allocation, investments selection, estate planning, etc. A successful plan will also give you a sense of purpose and ensure greater confidence in your ability to accomplish your financial goals.
3. LEARN---Successful investing requires an individual to understand the basic principles of investing.
These basics can be acquired through a combination of study and experience.
An investor may choose to work with a trusted professional or become a “do-it-yourself” investor.
Regardless of the path you choose, your chances of becoming a successful investor are enhanced if you have the basic skills and understanding of investing.
4. DIVERSIFY---Investors greatest disappointments have resulted from failure to diversify their portfolio. A concentrated investment can make you wealthy. Of course, the more likely outcome is an investor may lose all or a substantial portion of their original investment.
The most accepted asset allocation is a mix of stocks,
bonds, and cash.
The mix of stocks, bonds, and cash determines both the
returns you earn and the risk you experience.
Successful investing means finding the right balance of risk and return.
5. KEEP EMOTIONS IN CHECK ----Fear and greed are the culprits behind many of the worst investment decisions. The markets often provoke strong emotional responses that can undermine a sensible long-term investment plan. Investors also may be distracted by media commentary and news about financial markets.
To be successful, investors must keep their emotions out of their investment decisions.
6. MONITOR YOUR INVESTMENT ----You don’t need to obsess about your portfolio. For many, that kind of intense focus is usually not considered to be a productive means of increasing your portfolio.
However, it is sensible to assess the progress of your investment program and rebalance your holdings to match your targeted asset allocation. There are both simple and complex methods for monitoring your holdings, depending on the investment you have selected.
7. KEEP COSTS DOWN----Low cost is the most reliable predictor of high returns. Everyone wants higher returns. Fewer people pay attention to cost. Cost and return on your investments are directly linked. The best strategy for maximizing your investment returns are keeping costs to a minimum.
8. BECOME TAX EFFICIENT----Your goal should be to maximize your after tax returns, and not to minimize your taxes. No investment decision should be made based only on the tax consequences. However, the current favorable tax treatment of dividends and long-term capital gains can be a valuable asset to investors.
Also, prudent investors should be aware of the advantages of using loss to offset capital gains as well as the benefits of “ capital loss carryovers”.
posted by crg1 at 2:58 PM
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