Personal Finance Series #4: Investing Tips (Part Two)
Hi there,
Yesterday, we discussed investing tips from America's most famous billionaire investor, Warren Buffett. Let's continue the discussion today by getting tips from other investment professionals!
Buy when everyone else is selling: Sir John Templeton, the mutual fund billionaire, has this to say, "When everyone else thinks the world is coming to an end, it is the right time to invest." In order to win, we must sometimes take the contrarian road. We zig when everyone else zags, and vice versa. When it is the most scary time to buy (as in a market crash), that is often the best time to buy.
Do nothing - at the right moments: According to Paul Tudor Jones, the famous hedge fund trader, the most money is made by sitting tight and doing nothing. This is so true, for both when you are sitting tight on an investment (and resisting the urge to sell when there is market panic) and when you are on the sidelines (and resisting the urge to buy when there is market mania). We live in a world where there is constant action and distraction from so much data floating around; but do not let that color our judgment and investing focus. For example, if you have conviction that you are right about an investment, stick to your guns through thick and thin and sit tight through the market gyrations. It will more than likely pay off handsomely.
Use index funds if you like stocks: The self-help guru and investment advisor, Tim Robbins, has this advice, "Indexing is the way to go." He further states, "rather than paying off the mutual fund managers, it's best to buy a low-cost index fund and invest in great businesses that will win in the long term." I cannot agree more with this statement. Research shows that investment results from mutual fund and other professionally managed funds are no better than the results from passively managed broad-industry index funds. If you add in 2% management fees on top of that, the results are even worse. Some investors like to pick individual company stocks and that could work for some. However, it is inherently risky to put all your eggs in one basket (or a few baskets). My advice if you are new to stock investing: go with a low-cost S&P 500 index fund (such as the Vanguard S&P 500 ETF, with a management fee of 0.05%).
I hope you found this article helpful and I will be sharing more information on personal finance in the next series.
If you have any questions in the meantime, feel free to reply with your questions and I will try to help in any way that I can. Thanks for reading!
If you liked this article, please check out my previous posts below:
Personal Finance Series #3: Investment Advice from Warren Buffett
Personal Finance Series #2: Top Money-Saving Tips
Personal Finance Series #1: Money Management 101
If you are also interested in learning more about taxes, check out my tax series below:
Tax Series #10: Child Tax Credit
Tax Series #9: Standard Deduction vs. Itemized Deduction
Tax Series #8: Child Support vs. Alimony, and Why it Matters!
Tax Series #7: Top Tax Tips to Save Money
Tax Series #6: Tax Benefits for Students
About the Author : I am a cryptocurrency enthusiast and a U.S. Certified Public Accountant with over 15 years of experience in accounting, taxation, and finance.
If you like this series, please follow me @qwesttexas. I am here to help the Steemit community with personal finance and tax questions, and break it down into simple steps so anyone can benefit from it. Steem On!
Always good to know an accountant! I agree with your investing tips. I have been a professional investor for more than twenty years. One day I just decided to quit what I was doing and see if I could make money by investing and much to my surprise I could. I haven't written any investment posts, I've never really given any thought to what I do or how I do it. I've read a lot of books on economics and such. When I first started it was the dot-com boom times, so I was lucky to start at the right time. Since 2008 I don't make as much anymore but I get by. The best investment I ever made was to buy a cheap house here in Baltimore and fix it up. I was a real estate agent for a few years but never made anything at that. It only was good for me knowing what to do when it came to buying my own house.
I used to live in what I sometimes call "West West Texas". New Mexico- one of the poorest states in the Union. I now live in Maryland, which now has the highest per capita income of any state. It's a lot easier financially living in a rich state than a poor state. For example, we never buy new clothing. What people give away to thrift stores here in Maryland would cost a decent amount of money in other states. There are still thousands of abandoned houses in Baltimore, they are cheap and Baltimore is a nice city!
I've been to Baltimore, and indeed, it's a great city to visit. I'm in Texas now, so I don't venture out to the east coast too often but there is a reason why so many people live by the Atlantic seaboard... glad to hear that you are doing well with your investments. Thank you for taking the time to share your thoughts and the kind words!