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We love Nike and its ad campaign but many times in the world of investing its what you DON’T do that makes you successful and not what you do!! Here’s 3 very simple rules that make sense and for the “average” investor should be followed (maybe even for those who consider themselves above average).
1. Don’t play with your 401k/403b/employer retirement plan. So often, we see investors trading their 401k. Ducking in and out of the stock market. Too many investment folks preach market timing and for the average person this makes no sense especially in their 401k with company matching funds. Get an asset allocation that makes sense and stick with it- adjusted as your life unfolds and changes. Missing one market move can be disasterous- think back to the number of so called gurus who were calling for Dow 4,000 last March.
2. Don’t amass credit card debt - NEVER, NEVER,NEVER. We thought that we as a country were through this and that basically everyone knew that this was financial suicide but a recent surge in new customer meetings strewn with credit card debt changed our minds. Many of those people had adequate savings to pay off the debt. Bizarre, our advice- delay the Disney trip or the addition and live within your means rather than piling up credit card debt. The credit card “piper” always gets paid in one way or another.
3. Don’t take flyers on tips in the stock market. That’s what Vegas and Saratoga are for. Ignore bartenders, barbers and brothers-in-law who profer stock market “sure things”. We can’t tell you the number of $5 stocks that are basically worthless now that were going to quadruple.
Protect against the downside of credit card debt, hot stock tips and overtrading in your retirement plan and the UPSIDE usually takes care of itself!