The New Year has delivered a jolt to investors, as capital markets fell sharply worldwide.
Financial markets are not predictable, but the panicked reactions of “experts” amidst a market rout are virtually certain. Our annual resolutions for investors this year are as timely as they are timeless.
- I will understand my own circumstances and formulate an investment plan based on my needs, not in anticipation of market trends.
- I will ignore market prognosticators.
- I will remind myself that investing is not a form of entertainment—if I have an urge to gamble, I will go to Las Vegas.
- I will stick to my plan.
- I will not attempt to pick winning stocks.
- I will ensure that my holdings are adequately diversified within each asset class I own.
- I will focus on minimizing my investment-related costs.
- I will stay abreast of changes in investment-related tax laws.
- I will not purchase any financial instrument I do not understand.
- I will ignore money managers or others selling products rather than advice.
- I will take full advantage of my qualified retirement plans by making the maximum allowable contributions consistent with my budget.
- I will hold my least tax-efficient assets in my tax-deferred accounts.
- I will rebalance my portfolio infrequently, but at regular intervals regardless of the current state of the markets.
- I will not allow the price I have paid for a security to influence my future investment decisions—except for tax considerations regarding capital gains and losses.
- At year end I will harvest tax losses simply and without deviating from my target portfolio allocations, by selling and buying index-type funds within the same asset class.
- I will appreciate the simplicity of the AIS approach; instead of worrying about factors that are not within my control, I will establish my plan and turn my attention to enjoying life.
Also This Issue:
Quarterly Review of Capital Markets
Market History to Soothe the Soul
90 Years of US Stock Market Returns
The High-Yield Dow Investment Strategy
Recent Market Statistics
The Dow-Jones Industrials Ranked by Yield
Recommended Investment Vehicles
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