Got a kick out of a recent dilbert. It’s hilarious because it’s so true, although I’ve got this nagging feeling that 90% of the Dilbert audience doesn’t truly get the joke. The reason is because the average person probably doesn’t even know what a managed stock fund is, what high churn means, or even what front-load means. So let me break the cartoon down for you.
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This is one tip that I think that is especially hard to follow, especially for new investors. It can be fun to check your stock, investment, retirement portfolio every day or every hour to see how much money you “made” or “loss” that day. While it can be fun, it can start playing with your emotions and your judgment. When you buy an investment it should be for the long term and you should accept the fact that in the short-term (especially if you invest in stocks and mutual funds) that your investment will go up and down for no good reason (sometimes significantly).
“In the short run, the market is a voting machine but in the long run it is a weighing machine.”
– Benjamin Graham
The problem with watching daily fluctuations or reading daily media reports on your company is that you start thinking that these fluctuations are actually nonsensical and that you should take some action on these fluctuations to make or save yourself some money. This will eventually result in you making rash decisions to possibly sell an investment or run up a bunch of commissions because you are trying to play the market.
I personally think you should be investing for the long-term so my personal train of thought is that if you don’t plan on holding onto an investment for at least 10 years you probably shouldn’t be buying it in the first place.
“If the job has been correctly done when a common stock is purchased, the time to sell it is almost never.”
– Philip Fisher
So save yourself the trouble and just rely on your monthly investment statements to keep track of your portfolio and even then don’t get too worked up if a single investment or your entire portfolio rose or fell by 20%.
Step 1: Rack up some debt on your high interest credit cards
Step 2: Start paying your credit cards off.
Ok I know what a lame post, but to be honest if you have credit card debt and …
I recently had a reader who wanted me to write an article on whether it’s better to pay down debt or invest. Seeing as how I was recently profiled over at No Credit Needed I figured now was as good as anytime to tackle this subject.
What’s better, paying off debt or investing?
My theory is that I’d rather have less debt because I don’t like owing money even if the interest on debt is less than the return on the investment.Regards,
John
If you’ve been following my blog lately you’ve been noticing that I’ve been questioning why one would ever have any money in bonds in the long-term due to their sub-par performance vs. stocks. I’ve had tons of great comments and I thought I even summarized things pretty good, but in the end I don’t know that I really had it nailed down. I was still able to shoot my mouth off somewhat about how in the long-term stocks are still the best investment and I really kind of wanted someone to stick my foot in my mouth, well maybe not that harsh but there are two great posts about why bonds are a vital part of an investment portfolio.
Well turns out that me suggesting that young people with long investing time horizons invest 100% in stocks sturred up a lot of activity on my blog and to be honest I never could have imagined I would have gotten so many high quality comments on this post. I’ve learned a lot in the process (I think) and I figured it would do good to sort of recap the comments from the other post and give a general idea of what my readers thought (or at least my convoluted interpretation of their thoughts).
I know I have had a few people comment on some of my posts that I’m too heavily weighted towards stocks (100%) and it’s sort of common knowledge that when laying out your asset allocation in your portfolio that it is a mixture of stocks and bonds. Even most lifestyle funds for the most risky aggressive young punk classification have some money in bonds. For some reason I can’t get it through my thick skull why someone would put any money in a historically lower performing investment tool for money that won’t be touched for 30 or more years.