- Invest in a manner that aggressively fights inflation and prepares for longevity. Do not be overly conservative with your asset allocation. Even if you manage to save plenty of money, it is possible you may lack the purchasing power growth to match it.
- Carefully consider all investing factors to accurately determine your true risk tolerance.
You must consider your ability, willingness, and need to take on risk.
Ability: based on time frame. Willingness: measures the amount of
volatility you can accommodate.
Need refers to the level of return required to meet your spending goals.
- Determine if you have the financial resources (and stomach) to endure the worst-case scenario. If you have an investment that drops 50 percent, how much do you have to earn back, just to break even? Surprisingly ... 100 percent.
- Your financial health relies upon the proper balance of investment strategies. Never, under any circumstances, should you invest the money you need to maintain your current, base standard of living.
- Get familiar with common investment jargon. Just because someone talks like a seasoned investment broker, doesn't mean they have good financial sense or an understanding of how to construct a profitable portfolio.