12 Steps to Make you a Better Investor

Taken from the book "Investment Mistakes Even Smart Investors Make and How to Avoid Them" by Sewdroe and Balban.

1.     Any individual who is not professionally occupied in the financial services industry and who, in any way attempts to actively manage an investment portfolio is probably suffering from overconfidence.

2.     Unless it is for entertainment value, turn off CNBC, cancel your subscriptions to financial trade publications and don't visit Internet chat boards that tout great funds great stocks or new and interesting investment strategies

3.     Determine your unique risk tolerance, need to take risk, investment horizon, and cash flow needs.

4.     Build a globally diversified portfolio of passive investment vehicles such as passive asset funds, index funds, and EFTS consisting of multiple asset classes.

5.     Write an investment policy statement. Review it annually.

6.     Using guidelines established in your IPS, regularly rebalance your portfolio to its target asset allocation.

7.     Place your most tax efficient asset classes in your taxable accounts in your lease tax efficient asset classes in your tax-deferred accounts.

8.     Tax-manage your portfolio throughout the year.

9.     Save as much as you can as early as you can.

10.  Understand the true cost of major expenditures.

11.  Don't turn desires into needs.


The four most dangerous words in the English language for investors "this time it's different".