Four Common-Sense Tips To Improve Your Investment Returns
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| 1. Pay lower & fewer fees. |
Use a discount broker that charges low fees (many are rated by Smart Money Magazine) and avoid stock "churn" so you won't
pay fees often. Buy mutual funds with great caution because
they charge extra fees and usually don't pay as much as the
overall market.
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| 2. Manage risks carefully. |
Ten years from now, the Dow may be at 30,000 or 3,000 -- nobody
really knows. Many people would be shocked to learn that
the stock market lost nearly 70% of its real value between 1966
and 1982! Stock "experts" tend to downplay the serious
risks of the stock market. Recommendation:
Broadly diversify your investments in various sectors and
countries to minimize your risk. If you're young, stay very
patient and you'll probably profit in the long run; most others
should lean towards MMAs and inflation-protected
bonds.
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| 3. Take control -- don't settle for what's offered to you. |
Some financial salespeople are able to charm
people into making subpar investments while the salesperson gets
a commission. Never let your retirement account do poorly
because it's being funneled into investments that aren't right
for you. Your investing options are much broader than what
Mr. Smiling Salesperson offers you. You have a great
deal of control!
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| 4. Give stocks, not money to charities. |
When you give stocks (or tangible assets such as
artwork or collectibles) that have appreciated in value, you'll avoid
capital gains tax (which is 15% for those in the 25% income
tax bracket or higher) when you sell them. And you can still
deduct the gift's full current market value. Be sure the charity
provides you with a record of the asset's value on the transfer date.
Note: You must hold the asset for longer than one year, and
you can deduct no more than 30% of your
AGI (Adjusted Gross Income.)
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Life
