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Manage Your Investments Before They Manage YouPosted by Roth-IRA-401k on: 2006-04-24 09:34:52 in category:
Retirement Headlines [ Print | Permalink / 0 Comment(s) ] Manage Your Investments Before They Manage You Scott P. Frush, CFA, CFP By not following some very important and simple rules for managing your investments, you risk having your investments manage you. As a result, you could make costly errors and place your financial control, independence and security at risk. But what are these important rules you should know and follow in order to build and manage a winning portfolio and make the most of your investments? "From my experience and research, I have discovered some very important rules that enable investors to gain an edge over other investors." says Scott Frush, president of Frush Financial Group and author of Understanding Asset Allocation (www.UnderstandingAssetAllocation.com) and Optimal Investing. "These rules are the foundation for becoming a highly successful investor and building an optimal portfolio." Here Frush offers 15 golden rules to help you build your winning portfolio. 1. Allocate your assets properly. How you allocate your assets, rather than which individual investments you select or when you buy or sell them, determines the majority of your investment performance over time. 2. Establish your specific financial goals. Knowing your goals allows you to design a portfolio best positioned to attain your goals. 3. Make your goals realistic, achievable and measurable. 4. Identify your true risk tolerance. Make sure to address both your ability and willingness to tolerate risk. 5. Understand the fundamental characteristics of each investment. 6. Select your optimal asset mix. The driving force behind how you allocate your portfolio. 7. Focus on your portfolio rather than on the individual investments comprising your portfolio. 8. Diversify, diversify, diversify. Diversification is a cornerstone principle of asset allocation and can be accomplished quickly and easily with index funds. 9. Do not attempt to time the market. 10. Identify and incorporate tax implications into your decision process. However, remember that suitability takes precedence over tax implications. 11. Understand that recent returns are no indication of future returns. 12. Invest for the long-term. Do not play the market. 13. Understand that investing is a process. It is not a standalone event. 14. Draft an Investment Policy Statement. Your formal plan in writing. 15. Remain committed to your plan. With so many financial opportunities and risks, the management of your portfolio may seem daunting, but if you adhere to the rules above, you will manage your investments with success, rather than your investments managing you. About the author: Author Scott P. Frush, CFA, CFP, MBA is president of Frush Financial Group (www.Frush.com), a provider of wealth solutions to individuals and families, and author of Optimal Investing and Understanding Asset Allocation. Frush holds an MBA in finance from the University of Notre Dame and a BBA in finance from Eastern Michigan University. |
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