Six ways to help your keep you financial strategy on course
If your goal is a financially secure retirement, you don't want to get lost or sidetracked along the way. Here are six continuing activities that can keep you on top of your financial situation and your investment strategy. They are useful no matter how far along you are on the path to retirement.
Monitor your net worth: Each year, estimate the current value of all your assets (your home, savings, investments, etc.) and subtract your debts (the balance owing on your home, credit cards, loans). If you spot a growing discrepancy, work to resolve it promptly.
Stay informed: Learn about your investment options by reading and asking questions. Develop a personal investment strategy, and keep an eye on how your investments perform.
Fine-tune your strategy: Regularly ask yourself whether your investments still give you the best chances for the returns you need, given your age, income, desired level of risk and other personal circumstances.
Don't focus on daily market changes: Following the movements of the stock market can be educational. But for many people, daily monitoring is stressful, and sometimes leads them to make impulsive changes they later regret.
Maintain an appropriate risk level: Carefully weigh your ability to withstand risk against your need for high returns. Don't let panic push you into a risk category that's too high - or too low - for you.
Stay the course: Your overall plan should be based on proven principles of investing. By all means, make changes when they're called for, but dramatic changes made under pressure are a quick route to trouble.