Investment

10 Rules to Better Investing: Pursuing a Better Investment Experience

Navigating the financial world can be complex, with an abundance of investment advice, often contradictory. To help you achieve your financial goals, here are ten golden rules that could lead to a better investment experience.

1. MARKET PRICING EXISTS FOR A REASON

The stock market is driven by buyers and sellers setting prices through millions of trades daily. Trust in market pricing, which reflects the collective knowledge and analysis of Wall Street professionals. This approach helps you avoid trying to time the market, which is notoriously difficult and unreliable.

2. DON’T TRY TO BEAT THE MARKET

Long-term investment strategies are crucial. While some mutual funds may outperform the S&P 500 in the short term, this is rare over the long term. Even seasoned analysts can’t predict market movements consistently. Stick to your investment strategy and ignore short-term market noise to avoid potential losses.

3. HISTORY DOESN’T ALWAYS REPEAT ITSELF

On that same token, don’t make your investment decisions only based on past performance. Just because a mutual fund blew everyone away last year doesn’t mean it will thrive this year.

4. LET THE MARKETS WORK FOR YOU

In general, investors who hold tight to a long-term perspective and stay committed to their investment philosophy will more likely see growth in their portfolio. History tells us that the markets have provided enough growth to beat inflation, so sit tight and let the market work for you.

5. KNOW WHAT DRIVES RETURNS

Academic research has identified certain factors that may help you get the best return for your investments:

  • Stocks vs. Bonds: How you allocate your portfolio between stocks and bonds will have the biggest impact on your returns (and risk).
  • Company Size: Stocks of smaller companies (“small-cap stocks”) have historically had higher returns when compared to their larger brethren (“large-cap stocks”).
  • Value Stocks: Stocks can be broadly divided into value stocks or growth stocks. Historically, value stocks have outperformed their more flashy growth-orientated peers.
  • Profitability: Companies with higher profitability tend to have higher returns, over time, compared to lower-profitability companies.

If you focus your portfolio toward these known factors, you may have a higher probability of better returns.

6. BROADEN YOUR INVESTMENTS

Diversification is essential, but don’t limit it to your own country. The U.S. represents only half of the global market capital. By diversifying internationally, you can access a wider array of investment opportunities, which is a key part of smart investment strategies.

7. TIMING THE MARKET WON’T HELP YOU

Like rules #2 and #3, attempting to time the market is a risky endeavor. The stock market is unpredictable, and trying to forecast its movements can lead to unnecessary anxiety and potential losses. Focus on a globally diversified portfolio to benefit from opportunities wherever they arise.

8. MANAGE YOUR EMOTIONS

Emotional investing can lead to poor decisions. Recognize your emotional triggers and maintain discipline. A financial advisor can provide objective investment advice and help you stay on track during market volatility.

9. IGNORE THE MEDIA HYPE

Media often sensationalizes market movements, leading to unnecessary stress. Stick to your investment plan and avoid reacting to headlines. A disciplined approach is key to navigating the stock market successfully.

10. CONTROL WHAT YOU CAN

Since you can’t control the market no matter how hard you try, work on clarifying your goals and needs and work with an advisor to create a plan tailored to your unique situation.

Investing doesn’t have to be complicated, and it doesn’t have to scare you. If you want to pursue a better investment experience, implement these tips into your investment strategy and you may improve your chances of better investment returns and a secure financial future. At Archer Investment Management, we hold true to these ten rules and value disciplined, unemotional, and highly-diversified investing. You will receive objective advice from us as we work together to customize an investment plan for you. If you have any questions about these tips, click here to schedule a phone call. I’d love to hear from you!

About Richard

Richard Archer is a financial advisor and the President of Archer Investment Management with more than eighteen years of industry experience. Largely working with successful individuals and couples, he specializes in providing comprehensive investment guidance and personalized care and attention to each client. Along with holding a Bachelor of Science in Economics and a MBA, he is a CERTIFIED FINANCIAL PLANNER™ certificant and a Chartered Financial Analyst®. He combines his advanced industry education and knowledge with his genuine care for people to provide clients with an exceptional experience. To learn more about Richard, connect with him on LinkedIn or visit www.archerim.com.