including the world of investing, is lean not on your own understanding.
Most of the time, this is the result of people balking at entrusting another
person with their money, believing that with a little understanding they
can work the market themselves. This reasoning is fundamentally flawed.
In the first place, most people will not be able to begin to unravel the
complicated graphs, pie charts, and statistics by which the investment
world relates its information.
In order to understand what the numbers mean, you will need to have
some basic training. There may come a time after you have had some
experience in the market that you will be able to make sound decisions
on your own, but the initial get-your-feet-wet phase is not the time to
attempt it. Check the background of the advisor you choose, as there
are a lot of brokers out there looking for a quick fleece. The best brokers
will have years of experience, a variety of investment backgrounds,
and will probably cost you much less than you might think.
Think long term. Unless you invest millions of dollars initially, it will
take time for your investments to mature and begin to accumulate
substantial gains.
your funds in long term choices. The details of this are plain- it is best
to forget about this money in terms of a cash fall back, at least for a
number of years.
Diversification is an oft-flogged truism of the investment world. A good
portfolio will include cash and cash equivalents (GICs, fixed annuities),
growth investments (stocks), and growth and income investments such
as mutual funds. Diversification ensures that you do not have all your
eggs in one basket should any part of the market experience a downturn.
Note that diversification means not only investing in several areas, but
also making sure that no one area contains a disproportionate
percentage of your funds.