When it comes to money, don’t focus too much on the
little things. Sure, if you do the smaller things right chances are you’ll
be likely to follow through on the more important larger tasks. However time is
money and if you spend a significant amount of time focusing on the little
things like refinancing your mortgage every time interest rates drop or
attempting to increase the return on your investment accounts by a fraction of
a percentage or attempting to save that same fraction on investment fees and
commissions, you’ll risk losing sight of your financial big picture.
Making only a few major decisions correctly is far more important to your
financial future and overall financial health than getting many small decisions
right. So be sure to heed the old adage, don’t be penny wise and pound
foolish. To help you keep your eye on the big picture, the following steps
should assist you in staying on track:
Step 1 – Do Your Research
Get your hands on as much information as possible.
Between the internet, investment newspapers and periodicals and the library you
shouldn’t lack for solid, useful information.
Step 2 - Don’t Fear Decision Making
An important step is making the decision to develop a
plan and to stick to it. Making mistakes is part of the process but you must
learn from them so as not to repeat them and make better decisions the next
time around. If you complete step one, you will reduce the likelihood of making
a very costly one.
Step 3 - Set Both Long and Short Term Goals
Establish a plan and prioritize your goals so you know
where to apply the majority of your time. You need to manage where you put your
investment energies just as you do in other areas of your life.
Step 4 - Be Flexible and Nimble
Recognize that there isn’t one correct answer to
your money and investment questions and problems. You can only make the best
decision possible based on the information you have at the time. If you make
the wrong choices, cut your losses quickly and move on.
Step 5 – Review Your Goals and Your Progress
Frequently
Once you’ve established and begun executing your
plan, your work is not over. You must check your progress at least annually but
preferably quarterly. If an investment has gone south, know when it’s time
to sell and get out. Consult with your tax advisor if there are any tax
implications for you so you may complete your sale at the most tax advantaged
time. Then after some reflection, analysis and research move onto the next
opportunity.
