The Money, Honey: Taking Stock of Your Stocks
In my last article I talked about fearmongering among the book writers and how if the end of the world is coming, there’s no point in worrying about your investments anyway, because your investments will probably be the least of your worries. Survival mode kicking in, you’ll be worrying about how to…survive. Pension plans and retirement villas will not be what you’re thinking of.
But let’s assume the end of the economic world as we know it is not after all approaching, or at least is not imminent. Which means you have to have a plan in place that assumes long-term investment. Let’s look at some key points to that kind of investing that will carry you far into the future, assuming there is a future to be carried into.
- Do some basic research on stocks that should do well long-term. Be it technology, cyclicals (stocks of companies that cycle in and out of favor), or specific products like gold or copper or steel, once you’ve settled on companies that look like they will be successful over the long haul, start buying in whatever increments you can afford, and, like a squirrel, sock away shares of those companies little by little. In fact, it’s better to buy smaller amounts than to buy one large amount of one stock at a time.
- Make sure that at least one of the stocks you research and buy is a dividend paying stock. Why? Because, with banks yielding such low CD rates right now, why not capture a nice yield from a few of your stocks while you’re hoping also for price appreciation in those same stock shares. It’s another way to insure that your portfolio increases little by little over time.
- Don’t be afraid to reposition your stocks occasionally, perhaps every six months or once a year. It used to be that the thinking was that you bought a stock for the long haul and kept it for years or even decades. No more. Nowadays it’s okay to sell a stock within a year if it isn’t working for you, without the guilt of the “divorce.”
- It’s also okay to keep a little money aside for “gambling” investing. Every once in a while you’re likely to hear from someone about a stock that is going to split, getting FDA drug approval, coming out with a new product or technology that is going to take off and be the new hit wonder. If you have a little of the gambler in you, it might be exciting and fun to be able to put a little money into this kind of investment, not enough, of course, to matter to the course of your future, so that if the gamble doesn’t pay off, you won’t wind up a bag lady on the streets, but if it does double in value, you feel pretty good about your stock investing for a while, at least. Nothing wrong with that. If this doesn’t appeal to you at all, pass it up and put all your money into sound investments as noted in items 1 and 2. This is only for those who want a little more thrill in their investing, like those who like the roller coasters at amusement parks. You know who you are.
It’s always good to have a master plan when investing in the stock market. This is just the beginning, and next time we’ll keep exploring how to keep this plan working for you.