5 Tips for investing success

AMANDA CHRISTENSEN

Over the past 80 years, the chance of making money during any one year in the stock market has been 66%. Stock market returns have averaged about 9.6% over the past 100 years (Kiplinger.com). With stats like these it’s easy to assume anyone could be successful investing however; there are a few tips that the experts recommend to make investing a success.

1. MAKE INVESTING A HABIT: It’s the same as creating a regular, monthly savings habit. For most people with a small amount to start with, the best chance to acquire measurable wealth lies in developing the habit of adding to your investments regularly and putting the money where it can do you the most good. Most of the time you can set up an automatic investment “payment” once without having to manually make a payment every month.
2. SET EXCITING GOALS: Take the example of paying off a debt. The process isn’t very exciting BUT if you reward your efforts after you’ve reached your goal, you’re more likely to stick to it. Setting investment goals can be very exciting but you’re not going to reap rewards for a while so figure out a way to reward yourself as you reach milestones along the way.
3. DON’T TAKE UNNECESSARY RISKS: Sure, risk is the chance that you will lose your money but it’s ALSO the chance that you will earn less than the rate of inflation or less than the interest available at the time. To put it another way, risk is the chance that you will earn less than 2%-3% on your money. If you can’t reasonably expect to do better than that for the risk you’re taking, then there’s not much sense in taking the risk. What is prudent risk? Depends on your goals, age, income, resources, current, and future financial obligations. A financial adviser can help you determine your personal situation.
4. KEEP TIME ON YOUR SIDE: The earlier you start investing for a long term goal like retirement the greater the reward.  The time value of money is perhaps the single most important concept in investing. It’s easy to understand that a dollar received today is worth more than a dollar received five years from now because today’s dollar can be saved or invested and earn some kind of return. You can expect that dollar to be worth more than a dollar in the future.
5. DIVERSIFY: Don’t put all your eggs in one basket because no investment performs well all the time. When one is up another is down. Also-you may be able to increase your return by diversifying. There are many ways to diversify investments. A financial adviser can help guide your efforts.