The Four Keys to Successful Investing
By Chad Coe, RFC
Do you know anyone who has built a fortune by investing? Perhaps not personally, but you can probably think of at least one person you have heard of. On the other hand, you probably do personally know someone who has lost everything due to poor investment choices.
Now when you consider investing, you may not expect to build a multi-million dollar fortune, but you certainly don’t want to lose everything either. So how can you find the middle ground and invest to meet your individual goals?
While investing is complex, you don’t have to be an investment professional to do it wisely and successfully. You can use the following four keys which may help you reach your financial goals.
1. Avoid Common Investment Myths
The investment world is filled with fads and myths that provide a false sense of security and inspire poor decisions. For example, “Playing it safe and moving to cash during volatile times will benefit me in the long run,” “I know when to get in and out of the market,” and “Yesterday’s ‘hot’ funds will definitely be tomorrow’s winners,” are all common beliefs inexperienced investors hold dear. Obviously, if you want to grow your wealth, We believe you must avoid these myths.
2. Invest Like an Institution, Not an Individual
Institutions approach the investment process differently from individuals. While individuals tend to chase returns, institutions consider risks as well. Institutions tend to make purchases for the long term, but individuals often buy and sell in the short term. Institutions also use the advice of a professional investment manager to develop a diversified portfolio, while individuals tend to make decisions themselves that concentrate on individual positions. And many times, individuals base their buying and selling decisions on emotions, rather than a scientific process.
3. Seek Guidance from a Professional
Professional advice and insight can improve your investment decisions may help you reach your goals. The right advisor will keep you from making emotional decisions that may hurt your long-term goals. He or she will take the time to update you on your portfolio’s progress, provide you with customized monthly reports and quarterly and annual statements, and keep you on course with your investment objectives.
An advisor will keep you abreast of any additional opportunities in the market, continuously monitor your portfolio, and, if appropriate, take advantage of tax reduction techniques. And perhaps the best benefit of a financial advisor is that he or she will develop an investment plan using an institutional investment process based on your needs.
4. Utilize a Disciplined, Scientific Investment Process
When you enlist the help of a financial advisor, he or she will use a specific process for dealing with your portfolio. This scientific investment process generally will include the following six steps:
1. Design a customized portfolio based on your personal objectives, time horizon, and willingness to take risk.
2. Implement the portfolio with “specialist” money managers who specialize in very niche areas of the market.
3. Regularly monitor these managers and make changes as necessary.
4. Reduce taxes as possible.
5. Report your results, in detail, on an ongoing basis, with analysis and recommendations.
6. Review your portfolio whenever your objectives, time horizon, or risk tolerance change.
These steps are crucial to building the financial future you want. And a financial advisor can help you through each one.
Your Future as a Successful Investor
Investing can be confusing and intimidating to people outside the financial industry. But with the right guidance and education, you can use investing as a tool that may lead you to successfully reach all your financial goals.
Avoiding the common investment myths may help prevent poor decisions. And investing like an institution, rather than an individual, helps put your emotions aside. We believe every investor should enlist the help of a professional financial advisor to effectively diversify their portfolio, consistently monitor their results, and educate them on new opportunities. A financial advisor will also guide you through the six steps of the scientific investing process. This process is designed to cover all the critical aspects of good investment practices.
When you use these four keys to successful investing, you may be able to reduce unnecessary risk and create a strategy conducive to your financial goals.
To discover the best asset allocation strategy for your needs, contact Chad Coe, RFC. Chad is President of Coe Financial Group, Inc. in Deerfield, IL. Contact him at 847-444-9444 or chad@coefinancial.com.
Securities offered through First Allied Securities, Inc.
A Registered Broker/Dealer Member: FINRA/SIPC
