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    investing do's and don'ts

    July 11, 2011 Posted by: Tech CU

    The time has come. You’ve got some money put away and you’re ready to invest. Whether you’ve decided to do this on your own, or are working with a seasoned professional, it’s good to keep a few key things in mind to avoid the usual pitfalls made by investors.

    Determine your goals. First figure out what you are trying to accomplish with your investment. Is it a long-term goal? Do you need to pull cash out for living expenses? Think clearly about what the money will be used for and when you’ll need access to it.

    Realize that the market goes up and down. Most analysts agree that over the long term, markets do generally go up, but this can take 20 years. Blips and downturns do happen. If you are in for the long haul, you’ll need to keep your nerves in check to manage the changes.

    Over/underdiversification. Choose a few sectors or funds that appeal to you and that you understand. Spread the “wealth” around, but not too thinly.

    Tax Laws. Not a riveting topic to read up on, but more important than many investors realize. Figure out the best time to take a capital gain/loss. Be sure to understand if tax-free investments are appropriate for your objectives.

    Compounding. Remember that money compounds over time. In other words, if you are saving a certain amount each month, this number is getting bigger (hopefully), thus earning interest on a larger amount.

    Patience. There is no magic bullet for investing your money – despite what some infomercials and investment gurus may say. Some gains may be a matter of luck, but for the most part, you’ve got to be patient, persistent and disciplined. Create a focused plan and stick to it.

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