10 Investment Related Resolutions That Stack The Deck In My Favor To “Winning The Loser’s Game”:

25 Feb 10 Investment Related Resolutions That Stack The Deck In My Favor To “Winning The Loser’s Game”:

1.  I will not confuse entertainment with advice. I recognize that the financial media is in the entertainment business and their message can compromise my long-term focus and discipline which in turn serves as the catalyst to making poor investment decisions.

2.  I will stop searching for tomorrow’s star money manager since there are no gurus. 2/3 of all money managers underperform their benchmark and the ones that do beat their benchmark do not sufficiently compensate me for that additional risk. My investment success does not require someone else to lose.

3.  I will not make investments based on a forecast – whether it is mine or someone else. I recognize that the urge to form an opinion will never go away but I won’t act on it because no one can repeatedly predict the future. It is by definition – uncertain.

4.  I will keep a long-term perspective and appropriately consider my investment horizon (i.e., how long my portfolio is to be invested) when determining my performance horizon (i.e., the time frame I use to evaluate results).

5.  I will continue to invest new capital and work my plan because it is time in the market; not timing the market that matters.

6.  I will commit to my plan and continue to faithfully rebalance my portfolio (i.e., systematically buying more of what hasn’t done well recently) rather than “unbalance” (i.e., buying more of what’s hot at the moment).

7.  I will not focus my portfolio in a few securities or even a few asset classes because diversification remains the closest thing to a free lunch.

8.  I will ensure my portfolio is appropriate for my goals and objectives while only taking risks that properly reward me.

9.  I will manage my emotions by learning about and acknowledging the biases and cognitive errors that influence my behavior.

10. I will keep my cost of investing reasonable. Cost matters!

Kevin M. Nast is a Financial Planner with Transamerica Financial Advisors, Inc. in Bingham Farms, MI 48025. He may be reached at www.Map2Finance.com or 248.347.1888. Kevin also services clients in Bloomfield Hills, MI 48301 and the surrounding metro Detroit area as well as 13 additional states across the US.

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