I read this recently and think it will be really useful to reinforce them from time to time when things get overly optimistic.
1. Have a Plan
The old cliché is true. Nobody plans to fail, but many fail to plan. Having a comprehensive financial plan in place, understanding your goals, and proactively managing your investments are never bad ideas.
2. Have a Cash Cushion
The emergency fund is always a classic fashion. Like an insurance policy, you hope you never need to use it, but if you do, its there when you need it.
3. Live Below Your Means
If you make a habit of spending less that you earn, it will be much easier to survive if your earnings decline. Losing your job is never fun, but losing your house and car too make the situation significantly worse.
4. Nothing is Risk Free
Even money market funds can be problematic. Don't even put money in an investment, even it is being sold to you by your best friend, with the idea that there is no way you can lose money. Bernie Madoff's friends learned that lesson the hard way.
5. Nothing Rises Forever
From the S&P 500 to real estate prices, this little truism has proven itself over and over again. If there was ever a safe bet, this is it.
6. If it Sounds Too Good to be True, it is
Hope and greed cause investors do put their faith in the strangest things. Apply common sense before handing over your money.
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