In addition to being able to recognize a good investment, it’s important to know ways to safeguard your money and help it grow.
1. Understand the difference between saving and investing.
2. Don’t get caught up in the hype. There is a term in investing called the “herd mentality.” Common sense tells us that when the herd is going one way, you should be going the other way. Don’t base your investment on emotions. Deal in facts.
3. With reward comes risk. The key is to understand the different types of risk and the relationship of risk to reward. Aim for balance between risk and return in a way that is consistent with your temperament and financial goals.
4. Embrace diversification. By diversifying your portfolio, you can often minimize losses following the inevitable market downturns that will occur.
5. Minimize taxation and stay ahead of inflation. With your advisor, explore tax-free options available when it comes to your retirement savings.
6. Avoid procrastination. Time can be your best friend or your worst enemy, especially when you consider the amazing power of compound interest over time.