Things to do:
- Have a financial plan showing where you want to be and how you will get there.
- Develop an investment policy statement describing how you will make investment decisions to help prevent you from making emotionally-charged investment decisions.
- Whenever possible, invest often. Consider a systematic investment plan. This forces dollar-cost averaging.
- Work with a financial professional who is compensated to provide objective advice, not an advisor who's paid to sell products.
- Identify your risk tolerance before the next market drop, and have an asset allocation targeting that risk tolerance.
- Be truly diversified including large, mid, small, international, growth, and value stocks in you portfolio. Invest in corporate bonds, government bonds and international bonds.
- Make your asset allocation more conservative as you approach retirement.
- Rebalance your portfolio at least annually.
- Meet with your financial advisor at least every six months.
- Review and update your financial plan and estate documents at least annually.
- Have some liquidity in your portfolio. Having cash available will reduce your need to sell securities when their values are depleted.
- Take full advantage of the employer match on your 401k. Remember the match is part of your compensation.
- Understand the risk/return history and expectations for all your investments.
- Monitor how and how much your investment advisor is compensated.
- WORK WITH A FIDUCIARY - since they are obligated to act in your best interest.
- Let emotion get the best of you.
- Necessarily trust your financial advisor. Make him or her earn that trust.
- Trust "financial advisors" that encourage you to leverage your home, or push annuity products without mentioning the costs of such products.
- Be enticed by new, short-term investment strategies.
- Work with a financial planner who isn't financially motivated to constantly serve you.
- Neglect estate planning.
- Invest in things you don't understand such as gold, commodities, and options.
- Pay high investment fees or commissions.
- Seek advice from "financial professionals" who work with a limited range of products, such as insurance or annuity salesmen.
- Seek advice from friends and family who are not financial professionals.
- Invest for the long-term without an established emergency fund (3-6 months of expenses).
- Use short-term investments for long-term goals, or vice versa.
