The wealthy do something well that the majority of the Middle Class do not do so well… they invest.
Investing is hard, scary, and complex. Many don’t know what to do, nor do many even know where to start.
However, it is an essential part to obtaining massive wealth. If you’re interested in having more money in your life, investing is likely to be a top priority for you (see the power of compound interest here).
So, to help you master this touchy subject, I asked a bunch of experts for some helpful investing advice.
Their responses follow.
Richard Sturm, Financial Advisor and Public Speaker, Sturm Financial
As a financial adviser, my best advice for every age bracket is, “get out of debt, and stay that way!”
David Bakke, MoneyCrashers.com
The best piece of advice on investing I ever received came from my mother. She told me to never try to time the market or pick stocks.
The best way to effectively invest for retirement is to develop a balanced, diversified portfolio based on your age and risk tolerance, and to rebalance your portfolio one time per year. Other than that, you should leave it alone and let it grow over the long haul.
Michael Argiro, Financial Advisor, 4T Financial
Live below your means and don’t spend more than you make. It sounds easy but not everyone does it.
Think: do you need it or want it?
J. David Stein, Host, Money For the Rest of Us podcast
The one piece of investment advice I always share and follow myself is invest in undervalued asset categories not individual securities.
When we invest in an asset category, such as emerging markets stocks, that is selling for a valuation well below its historical average it is like discovering a bunch of un-popped corn kernels sitting on a heat source.
Just as we don’t have to guess which corn kernel will pop first and which won’t pop at all, when we invest in a diversified basket of undervalued securities via an ETF, we don’t have to predict which security will appreciate.
We just know that there is a greater likelihood for positive surprises and corresponding market appreciation in baskets of securities that are cheap.
Randall Reinwasser, CFP®, Solitude Canyon Investment Advisors
If you’re saving for retirement, bear markets are your friend.
- You can’t be wealthy with (bad) debt. Get out of debt and stay that way!
- Don’t try to time the market. It won’t work! (You may get lucky once or twice, but this isn’t a good strategy for the long term.)
- Develop a balanced portfolio that meets your risk level, and rebalance annually to keep that risk level in line.
- Live below your means so that you can invest more!
- It is important to identify what are ‘needs‘ and what are ‘wants‘. This will save you a lot of money!
- It is impossible to guess which individual stock will pop next, so it isn’t a bad idea to choose an asset category that is undervalued. Ultimately, what you want to do is have a positive expectancy model (which means your strategy has good odds of making you money in the long term), and this is one way to do just that.
- If you have a long-term view, don’t be afraid of a bear market. It will happen, and you can buy investments for a lower price when it does.
This is a lot of great insight, and a lot to digest. What questions do you have?