by William Hayslett
At some point, most of us have considered investing in the stock market hoping to earn a fortune. We’ve heard several success stories – how lives have transformed, even overnight for some, all thanks to the dynamics of the stock market. Even if you decide that the equity market is too risky for you, it is still highly recommended that you make investments to grow your wealth. So where do you invest, given the innumerable options you are presented with – Do you buy shares, or bonds, or invest in real estate, or put it all in 401(k)? Do you roll over your 401(k) into an IRA?
Confused if you must roll over your 401(k) into an IRA? Let us help you figure this one out. Read our article here!
The sources of advice we often turn to, to make our fortune, are either family or friends, financial experts found on the Internet, business networks, guides, and/or books. Often, our family and friends also direct us to these “expert networks”, and suggest we learn and grow. The availability of information at our fingertips in this era of technology has been a game-changer. However, it is important to ask ourselves: how much information can we take from the news and online resources to help make our investment decisions?
Financial information found online and in the news can make it seem like everyone is a stock market professional, making it difficult to decide who you can rely on as a source of information while making your investment decision. With a lot of unverifiable information found online, you need to be aware of the information you consume and ensure you know the fundamentals of the market. Additionally, financial news and media found online may not have information that is most suitable to your financial needs and concerns.
In the following article, we will focus on measures you can take while consuming financial advice from the media and other online resources, so that you may be an informed and empowered investor.
1. Identify Questionable Financial Advice
If a financial resource provides information that appears too good to be true – your gut instinct might just be spot on. For example, as far as financial advice is concerned, there are far too many people who fall for double-your-money-quick schemes. Be wary of them. Do not share your bank account details with anyone you don’t know or don’t have business dealings with. More importantly, know that there are no legitimate means to ‘double your money’ in a short time. The stock market, which is supposedly the fastest way to earn (along with the tremendous amount of risk it comes with to lose all), only delivers around 10-12% in a year on average. Looking for credible sources may be hard work, yet it is essential that you take all steps necessary to safeguard your investments. Remember that resources that provide free financial information are not personally liable to you; hence, you must take the necessary precautions while obtaining your information from online and other media sources.
It is highly recommended that you cross-check the credentials of financial advisors too before you engage with one. Any exaggeration should raise a red flag. A lack of transparency in their financial practices is also alarming and should raise a red flag.
2. Safeguard Yourself and Your Investments
It is essential to have a plan in place when managing your finances so that you can make informed decisions every step of the way. Here are three 3 to keep in mind in order to safeguard your investments in your investing journey:
- Take your time to study the content. Do not blindly trust anything you read or hear. Do not act on impulse. Pause and check if the information is clickbait meant to dupe you.
- Take heed of all the precautions. Snap financial decisions based on dubious claims can lead you into trouble. Clickbait articles thrive by suggesting that your decision has to be made in haste, that you have to act right away. Even if you’re getting carried away by the once-in-a-lifetime opportunity – take a breather. Put the information aside, reassess your goals, your financial plan, and come back to it later. Most likely, that opportunity was not an opportunity at all!
- Stick to your financial goals. You must keep revisiting your goals to make a decision. This way you can avoid rushed decisions and budget your investments. In doing this, you are constantly checking the allocation of assists. This proves to be a great way to help avoid pitfalls.
3. Keep These These 3 Investment Practices In Mind
- Stick to your financial goals
Once you have set your smart financial goals, try not to let news or advice run you off the track. It is human to continually change our wants and desires, which is also why setting smart goals becomes important in matters of personal finance. You may add to the reasons why you want to save, but your effort towards the saving should not be altered unless a pressing financial situation demands so.
- Be unwavering in your resolve while buying/selling an investment
This is easier said than done. Once you have decided to buy or sell an investment, don’t let the news or advice from friends tell you otherwise. Your decision is obvious and should be backed by research and a rationale that you are aware of. And your risk profile may be entirely different from someone else’s, so what works for them may or may not work for you. Stick to your guns.
- Revisit your investment portfolio and make educated changes, if necessary
It is advisable to periodically revisit your portfolio and assess its performance. It is recommended to re-check annually at least, if not bi-annually. Irrespective of how the market is performing, irrespective of what the newsmakers say, irrespective of what your colleagues think, call over your financial advisor if needed, and study your portfolio. Move money around in your investments if you feel the need for it. Add on to some investments or reduce the percentage of allocation if you feel a particular investment or segment is not matching up to your expectation.
What to look for when you revisit your portfolio:
- Revisit purpose of investment
- Revisit asset allocation
- Revisit financial plan
The Last Word
Nothing can beat caution. Practice utmost care when making decisions when it comes to managing your finances. It helps to keep your options open, and practice patience. Relying on any one source, not checking the source, and not paying heed to the red flags can land you into a bowl of boiling soup. Keep reassessing your goals and allocate a set period to revisit your financial plans. Stay safe and happy investing!
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To learn more about the author William Hayslett view his short bio.
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