Tips to Get Your Investments on the Right Track

Navigating the investing waters can seem like a daunting task. But with a little research, you’ll find that its actually easier and cheaper than ever to set up a great investment plan. Here are my tips to get the most of out your investments:

KEEP IT SIMPLE. The internet has a wealth of investment information, both good and bad. It has also helped develop massive amounts of investment products. The bad news is with all these products, knowing where to start can be confusing. The good news is that you can ignore about 95% of it. The other piece of good news is that the internet has made quality investment products accessible to everyone, and at a cheaper price than ever before. I’ve tried all kinds of complicated methods, and have found a simple approach of a diversified group of low-costs funds is the best way to go.

COME UP WITH A GOOD PLAN AND STICK TO IT. This is probably the most important thing you can do. I can sit here and argue which group of investments will have the best future return all day long. The truth is that there are many ways to get a decent return. But where many people run into trouble is by not sticking with their plan, and executing it over the long haul. The effects of compounding are going to work over time. The key is sticking to your plan through any market cycle.

IGNORE THE OUTSIDE NOISE WHEN VOLATILITY STRIKES. And it will strike. Believe me. When it does strike, most media outlets won’t be of an use to you and I. Market volatility (and I really mean sharp drops of the major stock indices) drives ratings and the media runs with it. Just like bad news, bad financial news gets airtime. My advice is to ignore it. This is, however, much easier said than done. When markets are calm, everyone thinks they can stay the course. Try to remember the last time the markets seemed to be in panic mode. How did you react? Did you make any rash decisions? Without the right temperament, you’re going to be more likely to make decisions you’ll later regret (like selling out at precisely the wrong time). If you have a solid investment plan, taking no action is usually the right choice when volatility strikes. If you need some reassurance, be sure to seek out voices that you can trust. For me, the most important voice I can trust is Vanguard. They have some excellent resources for investors to help in any market condition.

Sticking to these tips has helped me improve my performance, with much less stress when things go crazy. What tips have helped you?