Magic Bullet Investing

You might have heard about people who made a mint by investing just once. Well, these people are like the people who visit a casino and play a slot machine and hit the jackpot. The best way to characterize these investors is just plain old lucky. I don’t even think that calling them investors is the best thing either.

An investor is someone who makes decisions based on information, calculates risk and acts on analysis with the intent of seeing results in the long term. The above example suits a day trader more than it does an investor. In order to be successful with investing you need to think long term. Unless you have a million or two to invest you wont be seeing substantial returns for your investments for a while. The best investments are those that are proven over time. They are the best because the risk is less and with a bit of patience your investments will be growing constantly.

What I do when I invest is I completely forget about the money. I set a part of my savings aside and think as if this money is completely lost. It is gone and I will never see the money again. Set and forget is the way to go but set only after you make the right calculations and set the right plan in action. You will see results in years and when you look at the results you will be happy.

If you have been reading my blog you know how I constantly refer to diversification of ones portfolio and spreading your risk. This is great because if one investment option goes down you still can survive and move forward. The market does fluctuate from year to year and the more wise choices you have made the best you will do in the long run.

When you sit down with your investment adviser you should always have in mind that a diverse portfolio is what works best in all circumstances. A good and diverse portfolio should encompass cash and cash equivalents such as GICs and fixed annuities, growth investments like stocks as well as income investments such as certain mutual funds.

This way you wont be putting your investments all in one basket. This strategy works great, believe me. Because my financial adviser told me to spread my risk in certain ways I actually did ok during the financial crisis. It is about not putting all your eggs in one basket and making sure that your portfolio could withstand bad economic conditions.

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