Wisdom from across the decades

The Ticker

September 06, 1996|By Julius Westheimer

ON MY 80TH BIRTHDAY today, here's some of the investment lessons I learned, didn't learn or should have learned over the years:

Stick to quality, diversify, invest for the long pull.

Don't follow the crowd; the crowd is usually wrong.

Your own emotions are the best "reverse indicator" of what you should do in the stock market.

Build a quality portfolio that every news bulletin -- war, assassination, stock crash -- doesn't buffet. Good companies will be around a long time.

Be patient. Most investments take at least six months to work out.

Don't take "hot tips." Nine out of 10 go down the drain.

You need not live on a fixed income -- invest for a rising stream of dividends, not just capital gains.

Monitor the difference between your investment return and inflation. Inflation-adjusted results are what matter.

Don't let taxes dictate investment judgment.

SAFETY NETS: Mutual funds give you diversification and professional management.

Buy only mutual funds with a strong three-year to five-year record.

Save mutual fund commissions by buying "B" (back-end-load) shares.

Never have more than 35 percent of your holdings in one stock.

More mistakes are made by selling than by buying.

Put every nickel you can in tax-deferred retirement plans -- 401 (k), 403(b), self-directed IRAs, etc.

Don't overlook utility stocks for income.

The time to invest money is when you have it. "Timing" is a loser's game. But if you insist on timing, use "dollar-cost (P averaging," investing a set amount regularly.

Investigate before you invest. Nothing great will run away.

Never buy from people you don't know.

Bond and income funds -- even U.S. government bond funds -- carry risks; read a prospectus carefully before buying.

Pay down your mortgage before investing.

Let your profits run; cut your losses.

When buying stocks, go with the leader first. It's not the leader by accident.

Stagger CD, bond maturities -- some short, medium and long. Then don't worry about whether interest rates rise or fall.

Ask about "tax-deferred annuities," ideal investments for compounding growth.

There are no emergencies. "Tomorrow is another day," as Scarlett O'Hara said in "Gone With the Wind."

Enjoy your money -- now. This is no dress rehearsal.

Pub Date: 9/06/96

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