It’s crunch time. The last few weeks were critical. If you haven’t been preparing, it’s too late now. That’s right: it’s Christmas Eve and Santa’s Naughty and Nice lists are done.
At this time of year, parents around the country are taking delight in convincing their kids that good behavior is the key to better presents under the tree. While that may not be true when it comes to Christmas presents (we promise not to tell), it’s not quite as fanciful as it sounds. In a lot of cases, being greedy and irresponsible really can lead to worse results. Stock marketing investing is a perfect example. That’s why, in celebration of the holiday season, we offer you a guide to how to make it onto Cherries Naughty and Nice lists:
Naughty
Look at Stocks Individually
If you could time travel, you’d probably have bought an entire portfolio of Google stock in 2004 and would have a lot of money right now. On the other hand, it could have tanked and you’d have lost everything. The stock market as a whole is pretty reliable. It follows certain rules and patterns over time that individual stocks don’t. That’s why a good stock portfolio is all about balance overall and not about analyzing individual companies.
Cut Out Early
As kids, we learn how to control our emotions so that they don’t completely control our behavior. If you can’t do it, chances are you’ll end up on Santa’s Naughty list and your investments will suffer. Even rational adults are often driven by anxiety or greed without realizing it. When a stock drops or rises suddenly it can be tempting to cut your losses or take the money and run. But holding on over time is always the best strategy.
Get Smart
Think you’ve got an inside scoop? Found a way to game the system? Chances are you’re wrong. There’s nothing wrong with taking some risks if you’ve made a conscious decision to do so. But be aware that “get rich quick” schemes, on the stock market or anywhere else, are risky at best and fraudulent at worst.
Nice
Start Early
Compound interest is the interest your money makes that you can then invest so that it earns even more interest. This means when you retire, you’ll have more money if you start investing a dollar a year for the next ten years than if you invest ten dollars ten years from now. The earlier you start investing, even small amounts, the better you’ll do.
Keep an Eye on Fees
Besides understanding your investments, make sure you understand your broker. Read all the fine print in order to make the smartest investment decisions. Fees can add up and really eat into your investments. You’ll also need to make sure that the fee structure doesn’t create an incentive for your broker to encourage investments that might not be the right choice for you.
Diversify
Don’t put all your eggs in one basket. A good portfolio will include stocks from different sectors and with different risk levels. That way, you’ll have some high earners and some reliable earners and will come out ok, no matter what happens.
Have a Plan
Decide on your financial goals in advance. If you’re in your twenties and saving for retirement, your strategy will be very different than if you’re in your thirties and trying to open a business. Knowing your goals will help you invest wisely and help you stick to your strategy.
Review
You don’t need to be checking in with your portfolio too often. In fact, it’s usually best not to mess with a long-term strategy. However, you probably set up your portfolio with a careful ratio of different types of investments. Over time, that ratio can get out of whack and it’s worth checking in and redistributing every so often.
Although it may be too late to impress Santa, it’s not too late to get on Cherries Nice list. Happy investing and happy holidays!