Tips on Investing

1. Be wary of mutual funds. Few mutual fund managers can beat both the market and the expense fee that they charge.

2. Don't try to pick stocks. Picking stocks can be a very dangerous game, unless you know what you're doing.

3. Avoid fees. With long term investing, fees are a primary factor in total return.
Avoid brokers who take high commissions and avoid funds with high management costs.

4. Stocks are high risk, high reward. Over the long term, stocks have historically outperformed all other investments. But over the short term, they can be risky if they lose a lot of value in a short period of time. So, do invest with stocks, but only with funds you won't need to withdraw over the short term.

5. Stocks first, bonds later. Invest in stocks when you're young, and then move into bonds are you grow older. Stocks are a good long-term investment strategy. If you're still young when the market turns south, you'll have plenty of years left ahead of you to make it up. As you get older, invest in bonds. They're less risky.

6. Past performance is not a guarantee of future success. Just because a stock has been up for the last six months does not mean it will continue to go up tomorrow.

7. Diversify your portfolio. Never invest more than 10% of your portfolio in any one company. Even if it's a "sure thing".

8. Build a nest egg that is 25 times the annual investment income you need. Don't think you can rely solely on social security.

9. If you don't understand how an investment works, don't buy it. Research an investment vehicle thoroughly before you get into it.

10. Don't borrow from your 401(k). Think of it as robbing yourself. You'll get hit with high fees and taxes, too.

11. Invest for the long term. There is no such thing as a guaranteed get rich quick scheme. And in investing, there is no high reward without a high risk. Use caution and diversify your portfolio for the long run.

12. Seek professional help. Don't feel the need to turn yourself into a day trader.
Hire a personal financial advisor if you can afford to.

13. "Fee-only" is your friend. Go with a fee-only financial advisor, not a fee-based or a commission-based. Only fee-only advisors are legally obligated to act in your best interests.

14. Index funds are your friend. Index funds are passively managed and are generally cheaper and more tax-efficient than actively managed funds.