Investing Principles
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Successful Investing:
Ten Principles to Follow; Ten Mistakes to Avoid

Principles to Follow

Set Clear Investment Objectives

  • Ask yourself what you are trying to accomplish with your money
  • Review your goals periodically as circumstances change

Spend Your Time Before You Spend Your Money

  • Don't buy an investment until you know its potential costs, risks and rewards
  • Ask questions until you're sure you understand

Maintain a Long-term Perspective

  • Investing for the long term allows you to ignore short-term price fluctuations
  • Stocks have consistently provided the greatest rewards over the long term

Monitor Your Investments Regularly

  • Stay informed about your investments
  • Review your portfolio regularly

Diversify to Control Risks

  • Spread risk over several different investments
  • Allocate capital to several investment types

Buy and Hold is the Way to Go

  • Avoid the temptation to buy and sell in response to short-term market cycles
  • Use dollar cost averaging to buy investments gradually

When Investing, Taxation Should Have Representation

  • Evaluate your tax situation and its potential consequences on your investments
  • Consult your tax advisor for help

Take Advantage of Global Opportunities

  • Look beyond your own borders for investment opportunities

Put Time on Your Side

  • Take advantage of the power of compounding
  • Use the Rule of 72 to assess an investments potential

Invest with Your Head, not Your Stomach or Heart

  • Avoid the temptation to measure risk tolerance by how you feel
  • Choose investments likely to provide returns that will help you achieve your goals

  Mistakes to Avoid

Beginning a Journey without Knowing the Destination



 

Investing without Understanding





 

Being a Trader, Not an Investor





 

Failing to Adjust to Changing Market Conditions



 

Putting Your Eggs in One Basket



 

Timing the Markets




 

Failing to Recognize the Effects of Taxes




 

Participating Only in Domestic Markets


 

Ignoring the Time Value of Money



 

Investing Too Conservatively to Reach Your Financial Goals