Today, we're sharing a guest post from fellow Canadian blogger Mark, from My Own Advisor. Mark is a personal finance and investing blogger who runs a popular site for do-it-yourself investors, who want to get more out of their money. After getting fed up in his 20s about how his investments were performing, Mark decided “enough was enough” and became his own financial adviser, and he hasn’t looked back. You can follow Mark who is well on his way to financial freedom there, with new posts appearing every week, at MyOwnAdvisor.ca and on Twitter.
Over to Mark!
I get it. You’re pulling your hair out listening to the business news on TV and reading about wild market swings online or in the newspaper. Crisis over here, crisis over there and because of the financial drama, experts are quick to offer investment advice in bunches. Everyone is a critic. It’s hard to tune out the noise. But you need to. Why? There will always be something around the corner, things you don’t forecast, events you can’t predict because the future is always unknown – and don’t let anyone ever tell you anything different.
Regardless if the European debt crisis or our domestic struggles are just beginning or ending, it’s important to have some financial practices in place to keep you headed in the right direction. There are things I continually practice as an investor, and maybe some of these principles will help you as well.
You can’t invest what you don’t save
I try to save about 10% of my monthly income for investment purposes. Whether the market is up or down, I put the money away. To help me with this, I have automatic, pre-authorized transfers set-up from my chequing account to my investment account every month. This way, I never miss a contribution. I consider these contributions like bills, just like my cable bill, cell phone bill or heating bill, it’s just something I have to pay. I’m focused on my financial future so I can’t afford not to pay myself first.
Let your plan tell you what to invest in
I think too many folks have it backwards. So many people try to answer questions like “What should I invest in?” and “Where should I be putting my money?” The fact is, they should already know. Why? Their plan should tell them so. The thing is, if you have a financial plan, the plan will tell you what to invest in, where to invest and how often to do so. Without a plan, it’s like getting on the financial treadmill, you might do a lot of running but you’re not going to get anywhere. Make a plan, know where you want to go either short-term or long-term and stick to it.
Above all else, be patient
So you’ve followed my advice, you’re consistently putting money away and your plan tells you what to invest in and when – great! But the market dropped, your stocks tanked and everyone is telling you to run from banks, bonds and bullions. You want to react don’t you? Don’t...don’t do a thing unless it’s turning off your TV, the laptop or anything else that screams about the latest financial calamity. Forget about the falling sky and enjoy your life and the financial plans you’ve put in place. This wasn’t the first crisis and it won’t be the last. The stock market is unpredictable in the short-term but very predictable in the long-term, and you need to think and act long-term. I know it’s difficult, but just remember these few words if nothing else, the definitions of investing and trading are different for a reason. Be patient, be an investor and you’ll be wealthier for it.
I recommend you put these three financial practices into your life as soon as you can. Every little bit you save no matter how much, can contribute to a financial plan that in turn, can contribute to a crisis-tolerant, well-funded investment portfolio. I look forward to hearing how your financial freedom journey turns out. I’ll keep you posted on mine!
(Photo Credit: 401(K) 2012)