As a patient and disciplined investor with a longer time horizon, financial markets can become your ally rather than your adversary. All you have to do is make five informed decisions that will allow you to take advantage of the wisdom that Nobel Prize winners have acquired over the past six decades to stack the investment odds in your favor.
You CAN have a successful investment experience!
These decisions are:
1. The Do-It-Yourself Decision
Should you try to invest on your own or seek help from an investment professional? And if so, which type of advisor is best?
2. The Asset Allocation Decision
How should you allocate your investments among stocks (equities), bonds (fixed income), and cash (money market funds)?
3. The Diversification Decision
Which specific asset classes within these broad categories should you include in your portfolio, and in what proportions?
4. The Active versus Passive Decision
Should you favor an actively managed approach to investing that seeks to outsmart the market, or a more passive approach that delivers market-like returns?
5. The Rebalancing Decision
When should you sell certain assets in your portfolio and when should you buy more?
Each of these decisions has a significant impact on your overall investment experience. Whether you know it or not, every day you are making these decisions. Even if you decide to just stay the course and do nothing with your investment portfolio, you are inherently answering all of these five questions. We will provide you with the necessary background to make these decisions. And to help you make smart choices, we will share our opinions and recommendations with you. By learning how to make five informed investment decisions that capture the essence of investing, you will never again be afraid of financial markets or uncertain about what to do with your money. You will no longer be a speculator…you will be an investor.
Excerpted from The Investment Answer by Daniel C. Goldie, CFA, CFP & Gordon S. Murray. Excerpted by permission of Grand Central Publishing.
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