The Sydney Morning Herald has yet another list of things to do for beginning investors. I still like reading these lists as a reminder of the basics, plus you sometimes come across an interesting example or effective way of explaining a concept.
If you don't want to read the article in full, here are the seven points in summary:
1. Save a bit out of each pay packet. Easiest is by a direct payment into a savings account.
2. Don't chase winners - ie. don't invest in last years hot stock of fund. And don't panic and sell-out in a dip if your intention is to invest for the longer term.
3. Diversify your investments across different asset classes, and within asset classes (eg. more than one stock)
4. Don't waste money paying too much in bank fees or in credit card interest payments by carrying a CC balance.
5a. Shop around for the best rate on home mortgages and other loans, and check out any discounts available eg. "professional Package" if you have a large loan balance.
5b. Pay off non-deductible debt in preference to any tax-deductible debt you may have.
6. Remember that higher returns are compensation for taking on higher risk.
7. Get to know your spending habits in order to identify areas in which savings can be made.
Copyright Enough Wealth 2007
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