Deciding where and when to spend, and how to invest, in the coming year doesn't have to be as daunting as the jitters of the past 12 months seem to warrant. Cake Financial, a new online investment community that lets users follow their own portfolios and real-time trades as well as track those of investment leaders and friends, offers this advice.
Don't trade so much.
Trading too often is the No. 1 killer of investment performance, due to fees and capital gains that reduce profits. The best way to avoid both is to check yourself against other investors and key market indices before you buy or sell to be sure you're making intelligent decisions.
Don't forget the past.
Examining how your investments performed in the past can help you refine your strategies for the coming year. Review as much of the history of your investments as possible -- it will provide context about how your portfolio has performed over time and lend insight into ways you might alter your investment habits to reap greater returns.
Don't talk to Chuck.
Don't rely on just one or two people for advice. Tap into multiple, proven parties, not just a single banker or broker, say, but a number of them.
Do talk about money.
If you know other people who have been successful investors, don't be afraid to discuss money with them, in broad terms that will not reveal your specific investments. A good question to ask is, "What's your asset allocation?" That is, what percentage of your total investments are in stocks, in bonds, in real estate and other broad sectors. Opening up about your investing and inquiring of others about their approach may lead you to information that can change your outlook for the long run.
Challenge your adviser.
If you've entrusted your financial health to an investment adviser, don't hesitate to ask him or her to share his or her own investment record with you. You can verify it at www.cakefinancial.com, where it's free to create an account that reflects one's real portfolio and trades.
"The reason top-performers in the market share their ideas is that it's not a zero-sum game for investors," says Steve Carpenter, CEO of Cake Financial. "If you buy a stock and the whole world follows your choice, the market for that stock will go up and you'll make more money."
By Marshall Loeb