• Financial Planning
  • Behavioral Finance
  • Five Steps for Gaining Control of Your Investments and Avoiding Mistakes

    by Carl Richards

    We just don’t know what will happen next. It’s a reality that can be hard to handle as an investor.

    From fiscal cliffs and debt ceilings to unemployment rates and quarterly earnings, it can feel like we’re just along for the ride. And this feeling that we lack control, combined with uncertainty about the future, can make it very difficult to behave when it comes to investing.

    Your goal for 2013 needn’t be finding the “best” investment or even the next Apple Inc. (AAPL). Instead, you (and your portfolio) should be better off if you focus on the things you can control and implement strategies that help you avoid classic investing mistakes.

    ...To continue reading this article you must be an AAII member.

    Gain exclusive access to this article and all of the member benefits and investment education AAII offers.
    JOIN TODAY for just $29.
    Log in » Already a member? Login to read the rest of this article.
      
    Carl Richards is a certified financial planner and the director of investor education for The BAM Alliance (wwww.thebamalliance.com), a community of over 130 independent wealth management firms throughout the U.S.


    Discussion

    Jeff Carlson from MN posted over 3 years ago:

    The advice to create a personal balance sheet is priceless.


    James Joslin from NC posted over 3 years ago:

    Very good information. For all the noise in the marketplace and endless amounts of data, the main thing is to focus on our own behavior, timeframe, and investment needs.


    Peter Jochems from CO posted over 3 years ago:

    I'm a new member but a practicing CFP for many years. Great to see that the very basic net worth is used first. It really is the barometer of how one prioritizes their earned income, commits to savings, how dollars are spent, etc. it's pretty much the first thing I ask my clients to work on. Amazing how few really know the answer.


    Larry Taylor from SC posted over 3 years ago:

    Verg good advise, wish I a better way to really tell when the stock market topping out,
    The volity swings so rapidly it makes my head swim.
    Thanks AAII


    Durai Raghavan from TX posted over 3 years ago:

    I found this presentation useful but I was looking for more specific information but in that sense, was disappointed how thie article managed to stay on the sidelines. For instance, I being a retired person, am more interested in wealth preservation and it would have been great Mr. Richards talked about a few ways on how one can get this done


    Ramesh Patel from OH posted over 3 years ago:

    Lot of psychologizing and patronizing in the article although the whole piece is well organized. Little of practical use or application. Vague platitudes abound. As a previous comment noted, there is hardly much of specifics here as to how exactly all the principles as applied lead to actual investment success. A few examples of actual application can help.


    S Jones-Hendrickson from VI posted over 3 years ago:

    I find this to be a very powerful article, thought stimulating and a call for discipline. In the end, discipline will be the ultimate guide.


    Robert Lyon from NC posted over 3 years ago:

    Could AAII focus an article on investment behavior in retirement?


    Winthrop Harewood from IL posted over 3 years ago:

    GREAT article, thanks a million and one, for it.
    wh


    Marvin Glenn from AR posted over 3 years ago:

    This article reinforced my confidence in my cautious investment approach, and reminded me not to get too upset by missed opportunities.


    Rudolph Heider from MO posted over 3 years ago:

    article is too general. Need to show specific samples to be of use to the average person


    Walter Curtis from WA posted over 3 years ago:

    I'm in line with most of the above. As a retiree, I long for something with some specifics. This article certainly DID confirm that I am my own worst enemy. I've stopped watching CNBC and, having set up a reasonably balanced portfolio, try to only check my accounts on a monthly basis. My wife seconds that motion too!!


    Floyd Wright from TX posted over 3 years ago:

    Very helpful in my present situation. I am a retiree that needs to reexamine my financial positions. I agree that an article on retiree's preservation of investments would be very helpful.


    Muriel Chandler from IL posted over 3 years ago:

    As a retiree, I am looking for more information that will be helpful to me. I am eliminating CD's and I am searching for an upstart that may become another Apple. Guides to research new companies would be helpful and appreciated. Such things as how to do quick screenings of what and what not is important.

    This a very good article and it causes me to want more written this clearly.


    Dennis Roubal from MI posted over 3 years ago:

    Great organizational advice. For those looking for specifics, that is what financial planners are for; to help you decide what you should do. It can't be covered in an article.


    John Flynn from FL posted over 3 years ago:

    Excellent advice... The only step missing is monthly cashflow broken down into: Income (Long Term vs Limited Term) and Expenses (Fix vs Variable needs). This will give you a how much risk you need to take in order to meet your future growth to live a comfortable retirement. Why take look for the next Apple if all you need is a good dividend portfollio?


    Leslie Sublett from KS posted over 2 years ago:

    You sound like clones.


    Hildy Richelson from PA posted over 2 years ago:

    It is good to set goals, but setting goals without a system to achieve them can be very discouraging. Unlike institutions, individuals have finite lives. If you can systematically save that is one step toward solvency. If you put your money into high quality bonds yielding 4% or better than you can predict how much you will have at any given time. Though you might not experience the highs of the stock market, you won't suffer the lows either.

    Individual bonds are the only self-liquidating investment. You do not need someone else to buy what you are selling. They pay current interest that can be reinvested for growth or used as a paycheck substitute.


    Richard Abbott from FL posted over 2 years ago:

    I'm 84 years old and I use 115 minus my age in conservative balanced mutual funds, the rest in short to intermediate bond funds with 5 years cash in the money market to cover my expenses. I never sold anything in the 2008 through 2009 melt down. I'm up 165% since the lows in February, 2009. I did some re-balancing in the last 12 months by selling some stocks and placing the money in my money market.

    I owe a lot to the AAII article in the January, 2009 edition that stated don't "panic", don't "sell" and "stay the course". This article in the AAII Journal saved me well over a $100,000!!!


    Richard Abbott from FL posted over 2 years ago:

    I'm 84 years old and I use 115 minus my age in conservative balanced mutual funds, the rest in short to intermediate bond funds with 5 years cash in the money market to cover my expenses. I never sold anything in the 2008 through 2009 melt down. I'm up 165% since the lows in February, 2009. I did some re-balancing in the last 12 months by selling some stocks and placing the money in my money market.

    I owe a lot to the AAII article in the January, 2009 edition that stated don't "panic", don't "sell" and "stay the course". This article in the AAII Journal saved me well over a $100,000!!!


    John Knox from AL posted 9 months ago:

    I think it's a very good article. I also think one needs to have a cash flow sheet at least for a year in time and evaluate it every month. I inherently find keeping track of what I spend discomforting.


    John Landry from TX posted 9 months ago:

    I've used Quicken for a number of years for all of my bank, mortgage and brokerage accounts. The daily totals are all downloaded automatically, and I have only to check them to see my net worth for that day. The only problem with this easy access is that it leads to agony when the market and the net worth are down.

    With automatic downloading there is no need to "key" in entries, and once a month I reconcile the accounts for the paper statements.

    JKL


    You need to log in as a registered AAII user before commenting.
    Create an account

    Log In