What are the Traits of a good investor? We are increasingly finding there are many people out there we just can’t trust! It’s an almost weekly news item that some bank employee, financial advisor, or money manager took advantage of their clients and stole their money.
One of the best things you can do for yourself and/or your family is to be prepared to manage your finances responsibly. Even if you see investing as overwhelming or complicated and boring, you need to know the basics behind a well-thought-out investment strategy – at least enough to communicate effectively with a financial advisor or spouse.
What to do first? Be familiar with some concepts of investing. Some basics include knowing the types of investments – the difference between stocks and bonds for example. It also helps to understand that while it is important to take some risks when investing, there are levels of risk “comfort” between conservative and aggressive that you should know about yourself. When trying to decide how much of your savings to devote to an investment plan, be familiar with how much you spend so you can hold back enough to cover several months of expenses. Investments come in all forms, so being familiar with the main goal of an investment can make a big difference. If you need cash income payments versus an investment that grows in value over a period of time is an example. And finally (although this list can go on and on) try to obtain a rudimentary knowledge of different account types and how what role they play for your financial planning needs, such as Joint Tenants accounts and Trust accounts as well as all the various types of retirement accounts like 401Ks and IRAs.
If you feel you aren’t as knowledgeable as you should be about investing, you’re in good company. Plenty of people know less but aren’t willing to admit it. As a result, their portfolios suffer. But recognizing what you don’t know and being willing to ask questions will serve you better in the long run.
An investment in knowledge pays the best interest