1. Diversify
Stocks, bonds, cash, real estate and other investments provide varying rewards: Some protect against inflation, and others provide the growth or income you might need for specific goals. Furthermore, the prices of diff investments move at different speeds and, sometimes, in opposite directions. Owning something in each investment category allows you to take reasonable risks without producing unreasonable volatility for your portfolio. Likewise, you should diversify within each category, or in layman’s terms; don’t place your eggs in one basket.
2. Rebalance
The normal and abnormal moves of any given investment category can hinder your well-thought-out plans if you fail to rebalance regularly. By rebalancing I mean, reviewing your investments annually to make sure that the percentages you hold in each investment, has not strayed wildly from your original goals. Then, you sell investments that have performed relatively well and use the proceeds to invest in relative laggards.
3. Use a system
Another simple and effective method is to put your investments on autopilot by subscribing to an investment plan. Essentiality, you invest the same amount of money in the same investments on a regular basis. In doing so, you keep yourself from putting all of your money into an investment at an inopportune time and forces you to bravely keep buying even if the market tumbles.
4. Keep costs down
It's hard to gauge ahead of time what your investments will earn. But investment costs are something you know in advance and can control. For starters, you can save money on brokerage commissions by using an online trading.
Disclaimer:
This article was issued by Steve Diacono, for Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri & Co. Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.