Like Kyle, I’m not a big risk taker when it comes to investing, either.
I don’t claim to be a financial expert, nor do I play one on TV, nor did I stay at a Holiday Inn Express last night. Now that I got my official disclaimer out of the way, I have some very practical investment tips to pass along.
I was talking to my financial advisor yesterday about setting up a 529 College Savings Plan for our kids and I was picking his brain about the current state of Wall Street. I should add that he knows I am a pretty frugal guy and not a big risk taker, although his advice would apply to anyone who examines value before making a purchase.
Here are the 4 major bullet points from our conversation:
~ Remove Your Emotions. He said that if your favorite stock or mutual fund takes a big dip, don’t let that knot in your stomach cloud your judgment and talk you into selling. By removing your emotions from the situation, you may actually see a great buying opportunity instead.
~ Gotta Love a Good Sale. All frugal people can relate to this one. He brought up the old adage of buying low and selling high and that you can really set yourself up to do this right now. Wall Street is currently a yard sale with good values to be found.
~ Be an Investor, Not a Trader. Traders don’t think long term. Traders are essentially stock renters. An investor is someone that thinks long term and views the purchase as actual ownership in the company. By thinking this way, investors have a huge advantage over the market and will be able to see their way past this downturn.
~ Stop Watching The Ticker. He said not to follow your investments on an hourly, even daily basis as the volatility will drive you crazy and could trigger an irrational investment decision. I use to do this, and it was the biggest waste of time ever! Time that could have been spent doing something productive to better myself or spent with my family. He suggested a quick check on Friday afternoons or even to just look at your monthly statements.
I then thanked him for his time and as I was getting up to leave, he commented on the fact that he uses the free shipping coupons on my website all the time now, and avoids the store and mall altogether. When I was walking out of his office, I passed his big ol’ Ford Expedition and thought to myself, “I would too if I had to drive that beast around town!”
So I guess it just makes sense that I feature some of the better free shipping coupons on my site right now. Leave the gas guzzler in the garage and get it shipped for free.
I hope everyone has a safe and fun 4th of July holiday!
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Photo by Martini Captures.
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So true Kyle. We had a guest speaker at work and he really focused on the point that emotions can harm you financially. Go for the long haul and don’t stress too much about fluctuations.
I have all of my investment dollars in ETF’s, but I’ve been thinking of getting one or two actual company stocks. I still haven’t made up my mind about it yet, but I think it’d be fun to think that I own a piece of a company that I admire. (Two examples that come to mind: Honda and Apple.)
So far, I’ve jumped right in with my investing. Sometimes I hate it when I check it and the amounts have gone down, but then I always think, “Hey, now’s a great time to put more in and get more for my dollars.” Certainly helps keeping a positive spin on things. My emotions aren’t really tied into it, other than my hopes that for as tiny as my portfolio is right now, it’s well balanced too.
How about the index finds with low expense ratio’s? Your other points are very good.
The markets are bad all over the world. It’s a very good time to make some long term investments and keep. But my luck is bad where the stocks are concerned, I entered the market when it was at a high and now I am just stuck with all my money in there.
Congrats on starting your children’s college fund! You might be interested in a free service that helps you save called Freshman Fund. I am one of the founders.
Freshman Fund is a college savings gift registry that lets friends and family gift directly into your child’s college fund.