As the economic recovery around the world begins to pick up steam, people are slowly but surely getting back their sea legs for the world of investing. However, these newly savvy investors are equipped with a new sense of self responsibility for their own money. They are much less willing to simply trust a so called financial expert with their hard earned funds, and even if they do, they take the final responsibility for themselves.
For this new breed of more savvy, more financially aware individual, here are seven ways that you can invest your money like a pro without giving away your power.
1. Diversify with a Focus
Although diversification is definitely a good thing for any portfolio, the wise words of Warren Buffett also shine through: "Diversification is for those who do not research." Now none of us have 18 hours a day to research investments like the Oracle, but he does have a point when it comes to blindly diversifying simply for diversity's sake.
Have a focus, preferably in markets in which you have some sort of advantage in information.
2. Give Yourself Long Term Investments to Protect Your Retirement
You gain a great deal of leverage with the security of having your retirement fully paid for. You can do this by locking in the best interest rates that you can using annuities and other long term investments that do not allow you to touch the funds until much, much later.
3. Research Your Short Term Investments
There is absolutely nothing wrong with a bit of measured risk speculation after your long term investments are set in stone. However, do not lose money as if you were at a casino. Every investment can be researched, and the major winning strategy of most top investors is NOT moving when information can not be found.
4. Make Sure to Go Local
Some of the best interest rates can now be found at local and regional banks and credit unions. Do not skip them over for the larger banks just because you saw their advertisements on television.
5. Check the Records of the Investment Advisors that You Choose
Not all investment advisors are cut from the same cloth. Pay attention to the "alpha" rating of any professional investor that you choose to do business with. The alpha of an investor is the amount of financial gain that can be attributed to him directly rather than the natural flow of the market.
6. When You Choose Investment Help, Make Sure that they Share your Philosophy
Investment advisors also have different specialties. Some specialize in long term investment portfolios. Some specialize in short term speculation. Some specialize in certain industries. To invest your money wisely, you want to choose the investment advisor who matches your risk tolerance and who is interested in the same markets that you are interested in.
7. Take Final Responsibility
Although you may not have the time that a Peter Lynch has to go over his investments every day, you simply can not leave the ball in the court of your financial advisors, no matter who they may be. All 10-Ks and 10-Qs should come to your house and you should read them. Discuss them with your financial advisors if you see something that does not necessarily resonate with you as a positive investment for your portfolio. Do not become tied down by short term performance, but definitely measure the performance of your advisors against their competition in a thorough way at least twice a year.
By Andre Bradley