Debt Free Article

Top Ten Mistakes People Make When Investing

Mistake #9

Failing to implement your strategy in hard times

Another big mistake people tend to commit when investing their money is that they let go of their strategy when times are not at their best. If your investment strategy calls for investing in a stock fund every month, do this even if you think the stock market may decline next month.

When you develop your investment strategy you need to do the following: Select and asset allocation, formulate a goal funding plan, consider all special opportunities (disciplined savings ops and tax advantaged vehicles) and you have to understand transaction costs as well.

After you have done the recommended steps above, you will want to weigh the pros and cons of implementation alternatives.

Because you have several different alternatives for implementing your investment strategy, you need to carefully weigh the pros and cons of each before proceeding. Perhaps the most significant aspect of your decision is determining what is important to you regarding implementation. Here are a couple issues that you will have to face in implementing your strategy. Each of them involve some trade offs too:

• Time versus money. Do you want to hire a professional to look after your money investments, or are you really capable of achieving all this yourself?
• Recordkeeping. Do you want all your investment information on one statement, or are you okay with getting a bunch of different docs? It is easy to underestimate the papers involved in keeping track of individual investments yourself. If you own various stocks, you get all those reports in the mail all the time don’t you?
• Income tax planning. Are you willing to complicate your life to save taxes? For instance, an IRA would be yet another account you would need to keep track of. Are the tax benefits associated worth the additional paperwork involved along with annual service fees?

No that you understand how to implement your strategy a lot better, once it is place, you have to stick it out. A slow and steady hand is required here. Remember that if your investment strategy calls for something, you have to stick with it during good and bad times.

(378)

Back to Debt Free Articles