There’s no telling what the investment markets are going to throw at us this year. It could be bad, it could be good, or it could be a big nothingburger. This is an opportune time to make sure your investments are well diversified so that you can withstand all kinds of market conditions. Hard as it may be, resist the temptation to plow more money into a market sector that has risen of late or to sell investments simply because they are going through a rough patch. Slow and steady wins the race. However, if you’re in a real quandary, put some money in short-maturity (two years or less) U.S. Treasury bills. You’ll like their safety and interest, which is currently running over four percent. As I have said many times, happiness is a dull portfolio.
Smart Money Tips
- Beware of biased money advice. We are bombarded with money advice, and much of it is dubious, if not downright self-serving. Studies have shown that biased financial advice is shockingly common, particularly among advisers who receive commissions for the products they sell. A case in point is deferred annuities. These often pay rich commissions to the salesperson, so it seems that whatever the needs of a specific individual, all roads lead to an annuity. Also, be wary of advisers who try to persuade you to move out of low commission exchange-traded funds and no-load mutual funds into higher expense or commission-based funds.
- Deleveraging is de rigueur. Deleveraging is the unpleasant task of reducing debt. Devising a plan to reduce your loans, if you can swing it financially, will be beneficial in the long run. It’s never easy to reduce your debt but at a time when savings accounts and money market funds continue to pay modest rates of interest, you’ll be a lot better off financially by paying down high interest loans.
Food for Thought
Whatever method you use to pick stocks, your ultimate success or failure will depend on your ability to ignore the worries of the world long enough to allow your investments to succeed. It isn’t the head but the stomach that determines the fate of the stock picker.
-Peter Lynch
Money Can Be Funny
There’s plenty of money around; the trouble is everyone owes it to everyone else.
-Anonymous
Word of the Week
expatiate (ek-SPAY-shee-ayt), verb intr. – To speak or write at length
Origin: From Latin exspatiatus, past participle of exspatiari meaning to wander or digress
The new Congress reconvened last week, so expect many of our elected officials to expatiate on matters about which they have scant knowledge.