Five essentials to be a better investor

“It is our belief that Better Investors will experience higher returns, and be more comfortable and confident in the process.” -Steadyhand Investment Funds

I took some time recently to read Steadyhand’s free whitepaper called Five Essential Elements to Being a Better Investor.  It was well worth the read.  Here are Steadyhand’s five essential elements.

Be Realistic

Regardless what any financial guru might want you to believe, they cannot predict the future.  Otherwise, they would have retired long ago.  Steadyhand said this in the paper to set expectations going forward:

In the short term, you should expect anything and everything from the markets, including big ups and downs that nobody predicted. For growth-oriented investors, the ups and downs could be 15-25% in any given year. Even conservatively positioned portfolios will go down from quarter to quarter, and even year to year. But remember, attractive long-term returns include plenty of bad short-term periods.”

Have a Long-term Plan

Without a plan you are probably planning to fail.  Even with a plan, plans change over time and they depend on what’s going on in your life.   Financial plans should consider:

  • Age and investing timeline
  • Dependents
  • Career opportunities and risk
  • Debt and other assets

Steadyhand says it doesn’t matter if you design the financial plan on your own or you get help in doing so, the essence is, have one.

Commit to a Routine

After your portfolio has been set up, there’s still important work to be done. On-going management includes re-balancing, cash flow management, and for some, tactical shifts.” -Steadyhand

Like any other long-term change, there is discipline required to follow the plan.  Be patient and let the plan play out regardless of market conditions.

Prepare for Extremes

Down markets are to be expected.  Bad things in the market are going to happen and are a necessary evil.  That said, prepare for and learn to accept the extremes of the stock market.

You’re the CEO

“Better Investors are the CEO of their portfolios. They allocate time for managing people (including hiring and firing), judiciously watch expenses and regularly assess performance.” -Steadyhand

Just like CEOs oversee all operations, so should you.  Steadyhand suggests you should always be concerned about getting value for money.  It’s up to nobody else to do so.

What do you think of these rules?

9 Responses to "Five essentials to be a better investor"

  1. Well that is one ideal that I never get by me is the predictions of the advisor. I said it to his face. If you could predict the future you wouldn’t be sitting in front of me you’d be on vacation and retired by now. There is risk in everything when it comes to investing and I agree with this quote “Better Investors are the CEO of their portfolio” because it’s true. We need to take charge of our “investments” because they are our business, our livelihood and we are in charge. Only problem is when you don’t know what you are doing, that’s the hard part.


Post Comment