9 New Year’s Resolutions For Investors
New Year’s resolutions for investors should be focused on making them successful in building long term wealth. These 9 resolutions are part of the foundation of being an intelligent investor who can manage his own investments.
New Year’s Resolution # 1 – Take Control of Your Future
Don’t allow others to control your wealth and your future retirement! With all the scams and institutions going bust it makes sense to self-direct your investments.
Pay yourself first! Most people require an automatic investment plan to be faithful. Do whatever it takes to make yourself invest as much as you can, as early as possible. First priority is investing in a 401k plan matched by your company, or a Traditional or Roth IRA. These investment vehicles give you the advantage of growing your money tax deferred, or in the case of the Roth IRA, tax free.
New Year’s Resolution # 2 – Make Asset Allocation your First Priority
How you divide your assets will determine 90% of your returns. Can you believe that? It’s true; studies have proven asset allocation is the most important concept of investing. Most investors spend too much time on what stock to buy and too little on how much to invest in each asset category. Spend time learning more about asset allocation.
New Year’s Resolution # 3 – Understand the Difference Between Price and Value
To be successful investor in the long run you must understand the difference between price and value. Two famous quotes sum it up nicely. This Warren Buffett quote is often recited: “Price is what you pay. Value is what you get”; and Phillip Fisher points out that “The stock market is filled with individuals who know the price of everything, but the value of nothing”
When investing you must at least have an estimate of intrinsic value of the investment. The price may be higher or lower than the real value. To be successful you must be disciplined and not overpay.
New Year’s Resolution # 4 – Stick to Fundamentally Sound Investment Concepts
There are proven investment concepts that successful investors employ. Take the time to understand the ones that are critical to success.
New Year’s Resolution # 5 Have a Risk Management Plan
How much of your investment portfolio can you afford to lose? Make sure you understand the concept of maximum probable loss and how to control investment portfolio losses. Make diversification an important element of your portfolio management.
New Year’s Resolution # 6 – Keep Expenses Low
You only get to keep what you make. Don’t allow excessive trading or high fund costs to eat up your returns. If you own a mutual fund with a high mutual fund expense ratio it can cost you more than your original investment over a 30 year period!
New Year’s Resolution # 7 – Read a Good Investing Book
Reading keeps us sharp and informed. Read sound value investing books that teach you good concepts. I can heartily recommended these two books, one old and one new:
Deep Value by Tobias Carlisle (Amazon Link)
These two books will give you a sound foundation in investing principles and techniques for finding value and avoiding the pitfalls of following the crowd.
New Year’s Resolution # 8 – Take Advantage of Mr. Market
Mr. Market is part of Benjamin Graham’s parable which illustrates the difference between price and value and how the intelligent investor can take advantage of the moody and emotional Mr. Market.
New Year’s Resolution # 9 – Get Help!
You don’t have to tackle investing by yourself. There are plenty of good services that provide sound guidance to help keep you from making the big mistakes that destroy wealth.
There are many benefits to using an investing guide. Find someone you agree with, someone that has the same philosophy and temperament you do. Then learn and grow your investment knowledge and skills with which to finance your retirement and control your own destiny!
Value Investing Portfolio Management Guides
Arbor Asset Allocation Model Portfolio: AAAMP Global Value Portfolio, Trade Alerts
Dividend Value Builder: DVB Analyzer Newsletter, Treasure Trove Twelve Newsletter, DVB Portfolios Newsletter
While Arbor Investment Planner has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability, or completeness of third-party information presented herein. The sole purpose of this analysis is information. Nothing presented herein is, or is intended to constitute investment advice. Consult your financial advisor before making investment decisions.