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Resources » Finance/Investments » Banking »
Some Dos and Don'ts in Personal Finance
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The Right Financial decision are always crucial especially during the economic crisis.
There are some dos and don'ts you need to know if you want to move in the right financial track.
1. Don't try to predict the future.
We are currently in the midst of unprecedented and complex challenges says Femi Shote of Asset Harvest Group. Anyone who thinks he or she can predict what is going on to happen in the future is delusional.
2. Do keep enough Cash available.
Even if you are not worried about losing your job, a savings can provide peace of mind. There are significant guidelines on how much cash to keep on hand. With extra cash available you can avoid selling investments to pay for expanses in an emergency.
3. Do invest internationally.
Though the financial crisis started in United States, we have seen the worst in the rest of the world too. So many stocks coming down drastically. Even after a year like that advisors say it's not wise to abandon International investments inertly. For one thing, though some key overseas economies, like China's, have been hit hard lately, their long term economic fundamentals looks better then those of United States.
4. Don't try to pick one winning investment. Diversify.
Putting all your money in one stock is always dangerous. Hence you should keep a balance in fixed income and stocks with shares of various types of companies, small & large. Don't just pick the winning idea.
5. Do live below your mean. Save.
Investing in future is only possible, if you have some money left over at the end of each month to sock away. Unless you have it you can't invest.
6. Don't make sudden moves.
Refrain from making extreme changes to the portfolio just because financial markets are volatile. Stick to the overall investment game plan. In such extreme environment, decisions based on emotions or fear are likely to loose you money. Hence it's better to forget the day to day news and stick to a long term plan.
7. Do pay off Expensive debts.
Before investing your money, it's always better to paying off your debts especially those with high rates or those for which interest is not tax deductible. The Avoidance of interest can save you much more then the investment would have earned.
8. Don't give up on Stocks.
Though investors approaching retirement should not risk too much money in volatile equity markets, investors hoping to built a nest egg for the long term have few better options then the stock markets.
9. Do track your spending.
It's always easy to lose sight of where your funds are spent. Most of us don't know where our money goes.
10. Don't pay high management fees.
It does not matter, how much your investments earn, it is also important to calculate how much you get to keep after trading cost and fees paid to financial advisors and fund managers. When market returns are small, even 1 or 2% management fees can hurt.
11. Don't forgo necessary insurance
You can save some money by increasing your car insurance deductible or forgoing life or home insurance but you could also be left penniless after a serious emergency. Full coverage do not always necessary but make sure you are protected in worst conditions.
12. Do check your financial advisor.
There is always a danger of over dependent on the fund manager or financial planner to handle your nest egg.
13. Don't invest in anything you don't understand.
If your advisor or broker can't make you understand adequately in a investment
in a few sentence, this may not be suitable for you.
14. Do make sure, safe investment are actually safe.
Just because some thing is a fixed income investment, does not mean it's safe.
Bonds are for safety, so make sure your bonds are safe. Incase your bank or broker fails, make sure that your account are covered by insurance.
15. Don't take more risk then you can handle.
Make sure you really understand how much risk it is and are you really want to go for it.
Thanks & Best Regards.
Binamra
(Collected from the Xinpai Jewelry website)
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