The Five Rules of Investing

1) Invest for the long run

• The more time before you need your money, the more risks you can afford to take with it. This means investing in stocks, bonds, and real estate.

• Understand your risk tolerance.

2) Balance your investments

• Fixed income (30%-­‐40%): Bonds, money market funds, certificates of deposit (CD)

• Equities (60%-­‐70%): Stocks, real estate

3) Diversify your investments

• To reduce your risk buy funds that hold a diverse group of investments rather than buying individual stocks, bonds, or real estate

Stock mutual funds
Bond funds
Real estate investment trust (REIT)

4) Shop around for low fees

• Choose investments that have low expenses – they are the most important indicator of how well the investment will perform

• As a rule, index funds have the lowest expenses

5) Educate yourself about investing

• You are ultimately responsible for your own investing decisions

• There are many resources to help you learn about investing

Tom Copeland -­‐ www.tomcopelandblog.com