Investing wisely is a function of your specific needs and goals. Each investor has different objectives that need to be met depending on age, income, planned activities, and attitudes about risk. How can you work with your investment advisor to best determine which investments are right for you? Among the important factors to consider are personal status, plans, and constraints. Some of the issues that you and your advisor should consider in defining the objectives that are right for you are listed below.
Goals and Needs. You may have specific goals and requirements that you want your investment portfolio to fulfill. For example, you may be funding college for children, business expansion, travel plans, or retirement needs. You should identify these goals and needs clearly with your investment advisor so that his or her recommendations for your portfolio can assist you in meeting them.
Recognizing How to Avoid Missteps is Often the Most Important Part of Creating a Successful Investment Program
By repeatedly committing one or several common investment mistakes, individual investors often prove to be their own worst enemy. Unfortunately, even seemingly simple missteps can, over time, have a dramatic impact on overall returns. Recently, CFA Institute, which administers the prestigious Chartered Financial Analyst® (CFA®) Program worldwide, asked selected members to share their perspectives on some of the most common and costly mistakes they witness individual investors make.
Among the most common mistakes:
No investment strategy. From the outset, every investor should form an investment strategy that serves as a framework to guide future decisions. A well-planned strategy takes into account several important factors, including time horizon, tolerance for risk, amount of investable assets, and planned future contributions. "At the outset, individuals should have a clear sense of what they want to accomplish and the amount of volatility they're willing to bear," said Jeanie Wyatt, CFA, CEO of San Antonio-based South Texas Money Management.