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You don't have to be a financial wizard to be a successful investor. However, it helps to have a few timeless, tried-and-true rules when you make investment decisions.
Start with your goals. Every sound investment plan begins with the same questions: What are you investing for? College for the kids? A cabin by the lake? A secure retirement? Write down your goals, how much money it will take to meet them, and a timeline. The more specific you are about your goals, the more motivated you'll be to maintain a plan that will successfully achieve your goals.
Know your risk tolerance. Risk and reward go hand in hand in the investment world. Generally, the higher the potential reward, the higher the risk. Finding your personal comfort level with risk and reward is a balancing act: you can strike a balance that lets you pursue your investment goals and sleep comfortably at night, too.
Diversify through asset allocation. Diversification reduces risk; it's the art of not keeping all your eggs in one basket so that one single loss won't jeopardize your whole plan. Asset allocation is the art of placing those eggs among various types of investments in order to most effectively address your investment goals. Over time, it's important to continually reevaluate your portfolio as your investment goals and needs change.
Put time on your side. It's never too soon to start investing. When you have a longer-term investment horizon (5 to 10 years), you can afford to take more risk, thus increasing your potential return.
Choose the right partner. U.S. Bancorp Investments can help point you in the right direction to meet all of your short and long-term financial goals. Learn more or locate your nearest U.S. Bancorp Financial Advisor.
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