Investments 101: DO’s and Don’t for rookie investors.

Taking a plunge into investing can be an exasperating experience. What should you buy? Who can you trust? And most harrowing of all: What if you end up losing money? At the core of it, the concept of investing is simple. The problem however is, the investors are often tripped up by emotion, speculation and poor advice from others. Investing your money is the key to reaching long-term savings goals, and it doesn't have to be a stressful or arduous process. In some of our previous blogs, we have shared a few concepts of investing like diversification of your investment portfolio, etc. All these concepts coupled with brilliant guidance from Cedrus Wealth Partners,can help you start your venture into investing, ‘the right way’.

Here are a few do’s and don’t for ‘rookie’ investors;

• Do: A ton of research.

Before investing your hard-earned money into a stock, mutual fund, ULIPs or any other market investment, be sure it’s worthy of your money. Television shows, articles, advertisements and other sources of investment advice can point you in the right direction, but that should only serve as a starting point. This goes for the person or company you choose to help manage your investments as well. Having a financial advisor by your side will give you added benefits, but you should put in a careful amount of research before you choose.

• Don't: Try to time the market.

Simply put, you can’t time the market.

As the most famous and well-respected investor of all, Warren Buffett, wrote in this year’s letter to Berkshire Hathaway shareholders, "The goal of the nonprofessional should not be to pick winners – neither he nor his ‘helpers’ can do that – but should rather be to own a cross section of businesses that in aggregate are bound to do well."

• Do: Diversify your investments.

Diversification can help an investor manage risk and reduce the volatility of an asset's price movements. However, no matter how diversified your portfolio is, risk can never be eliminated completely. You can reduce risk associated with individual stocks, but general market risks affect nearly every stock, so it is also important to diversify among different asset classes. The key is to find a medium between risk and return; this ensures that you achieve your financial goals while still getting a good night's rest.

• Don't: Invest according to emotion.

Positive emotions can be just as destructive to your earnings; don't fall in love with an investment that isn't performing with the hopes that it will regain value some day in the future. There's no place for love or fear in investing, only calculated decisions based on data.

• Do: Pay very close attention to fees.

On paper, your returns for the year might seem impressive. Unfortunately, once you subtract all the fees paid to purchase and manage those investments, the yield starts to look less exciting. In fact, you could easily end up sacrificing 40 percent of your return to fees, according to Forbes. Trade commissions, expense ratios, advisor fees – they all add up and take a big bite out of earnings. It pays, literally, to research the costs associated with all possible investments before making a final decision.

• Don't: Wait.

If you think you can make up for lost time by investing more money down the road, don’t. Thanks to compound interest, you would still earn more over the life of your investments by investing less now than a bigger chunk later. Add inflation and increasing life spans to the equation, and you can't afford to give that money up to procrastination.

• Do: Maintain cash savings.

It’s very important to understand the objectives of your savings and how to put it to work based on your goals. Market investments are for the long-term, at least 10 years or ideally longer. A separate, cash savings account should always be maintained for immediate needs.

Remember, patience and research are key to success in terms of investments along with proper guidance. At Cedrus Wealth Partners we are determined to provide you with required guidance and complete transparency.

For more information visit us at Cedrus Wealth