1. Your investments should be globally diversified. And that means the entire world, not just the US, Europe and Asia. Small and large companies. Value and growth companies.
2. Track your investment performance against worldwide benchmarks. Annually.
3. Consider the impact of an eventual increase in interest rates, especially if you own bond funds.
4. Have a written, long term investment strategy. It doesn’t need to be complicated.
5. Be disciplined and stick to your written investment strategy, regardless of how the stock markets are doing in the short term.
6. Understand the fees you are paying for all of your investments, whether you see them or not. Stock and bond mutual funds. Alternative investments. Individual bonds. Your advisor. You may be surprised by what you find.
7. Understand how your advisor is really compensated. The financial interests of you and your advisor should be aligned (on the same side of the table). Like a fee-only advisor.
8. You can only control things that you can affect, like most of the above. You cannot control the direction of financial markets or any company.
9. Be prepared and plan for the unexpected. And talk to your advisor about what that means.
10. Reduce your taxes by putting certain investments in retirement accounts and others in taxable accounts. Make sure that you and your advisor understand these concepts.
Monday, April 18, 2011
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