A Wealth of Common Sense: Ben’s 4 Common Sense Rules of Investing
The recent bear market has wreaked havoc for portfolios of investors large and small. During a market rally, it’s easy to buy just about anything and watch the price rise.
However, that can lead to extreme valuations and lead to big pullbacks when the music stops. Investors who follow a few simple guidelines don’t have to be at the complete mercy of the stock market.
That’s why having some ground rules can make a huge difference in your investing returns.
Sure, it’s easy to see that, in time, stocks usually go up. But when the market has been down recently, it’s a time of fear. Investors should consider the long-term in mind, and use opportunities like a bear market to acquire stocks worth holding for years.
At the other end of the spectrum, it’s normal for the market to have down years. The lesson is that investors should look out for such years as a buying opportunity. And that they shouldn’t get overly bullish or risky when markets have been rising for some time.
And while the economy may look incredibly risky at times, the world hasn’t come to an end yet. If it does, your portfolio will be your last concern. That’s why it still makes sense to be mostly invested, most of the time.
