Investing Do's and Don'ts

Investing Do's and Don'ts

It's important to focus on the things that you can control.


Save. You can’t invest money until you’ve saved money. Saving is all the more important in the context of the depressingly low expected returns we are facing today. The market likely won’t do the heavy lifting for you over the next ten years, so you will have to shoulder more of the burden.

Keep it simple. Don’t stray from your circle of competence. It’s all too easy to be lured outside your wheelhouse by friends, neighbors, or marketers. Complexity is costly and rarely yields benefits to the investor. This applies to investment products, home appliances, you name it. The further you stray from your circle of competence, the more likely it is you will lose.

Keep it cheap. Fees subtract directly from your investment returns. Be stingy when it comes to the price that you pay for investment products.

Be tax-aware. Don’t give Uncle Sam a penny more than you have to. Maximize your 401k plan contributions. Outside of retirement plans, invest for the long run to minimize turnover, invest in tax efficient funds that do the same, employ tax-loss-harvesting strategies, and optimize the tax location of your assets.

Set aside some “funny money.” Put aside 5% or so of your portfolio for dabbling purposes. Use it to buy that hot stock your neighbor told you about. You’ll win some and you’ll lose some, but most importantly, you’ll prevent yourself from doing silly things with your serious money.


Overpay. Yes, this is just restating No. 3 above, but the importance of keeping costs under control cannot be overstated.

Look. Try not to pay too much attention to what is going on in the markets and how it is affecting your portfolio on a day-to-day, week-to-week, or even month-to-month basis. Turn off CNBC, take a break from The Wall Street Journal, and maybe pick up a good book instead: I recommend Jack Bogle’s “Little Book of Common Sense Investing.” This is exceedingly difficult, but tuning out short-term noise can keep you focused on your long-term goals and prevent you from tinkering with your portfolio at exactly the wrong times.

This communication offers information on investment subjects of general interest which should not be construed as a recommendation to buy or sell securities.  Such decisions should consider the unique circumstances of the reader.  Our advice may differ depending on individual circumstances; non-clients must make their own evaluation of investment options and consider whether an investment is consistent with their objectives, risk tolerance and financial situation.  TWM disclaims any responsibility to update views expressed, which may not be relied on as investment advice   Past performance is no guarantee of a future results. Securities can lose money. Stock and bond securities are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments.


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