Does this sound familiar? The stock market has been going up significantly since the beginning of the year but your portfolio is down. That is one clear warning sign that it is time to do some work on your portfolio before things get even worse.
There are a number of additional warnings signs that an investor should look for when analysing their portfolio. Each one of these warnings signs signal that it is time to do something. In other words, you need to take action and you need to do it immediately.
Warning Sign #1: Not keeping up with the market
This is the most important warning sign. If your portfolio returns are not as good, or better, and the overall market (i.e. S&P 500), then you are doing it wrong! It is too easy to simply buy an index fund to receive the return of the market so there is no excuse not to get at least that level of return. Read More…
If you’re paying fees in excess of 2.5% then that is already a bad idea and needs rectifying. There is no mutual fund that is worth paying that much that can translate into quality gains to cover that kind of yearly loss at least in the long-term.
Diversify, diversify. It cant be said enough. Unless you have a collection of bonds, index funds, growth, and some foreign then any real returns may not be much better and more likely much worse than the TSX or S&P500.
The biggest warning sign should be if you are not researching and keeping up with what is going on in the marketplace then you are setting yourself up for failure. I understand the reason for the making of funds (made for the lazy) but unless you research into what you are putting your money into i can’t feel any compassion for those who lose their life savings on dumb planning.
Very good advice. If you don’t know what you are doing then invest into index funds and watch the growth over the long term. The problem i’ve noticed is that people cant help themselves. When they see their unit prices going down they panic and bail.
It’s way too easy to just follow the crowd and do what everyone is doing. I have been a sucker to jump on trends at their peak only to ride the wave downward and lose it all. I have now become too scared to invest in large quanitities.