When common sense isn’t followed, what does that look like? What common sense should we adhere to when it comes to financial planning?
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Today we are going to look at several basic statements that you often hear in the financial world. But, more often, people tend to do the opposite of these common sense concepts. Are you making the right decisions when it comes to financial planning?
To be successful in the market, you want to buy low and sell high. Unfortunately, when the market shifts some of us start to panic. It’s important to have a holistic plan that assesses risk and helps you focus on your goals. The real value an advisor brings is behavior modification to help you focus on the plan and avoid selling in a panic.
When it comes to taxes, no one wants to pay more than you have to. It comes down to, are you doing tax preparation or tax planning? The difference in looking at the past vs. the future. What is causing taxes? Can you lower your tax rate legally?
To save money, you have to keep costs low. Do you understand what you’re actually paying when it comes to mutual funds? The hidden costs can really add up. By reducing that expense, you’ll be able to keep more of your money and an advisor can often help you do that.
We all know to diversify. But instead of diversifying between dozens of different mutual funds, think about diversifying between risk and safety. Owning multiple mutual funds might mean owning the same funds ultimately, which is not real diversification. Are you diversifying effectively?
[1:06] – Buy low, sell high.
[3:13] – Don’t pay more in taxes than you have to.
[5:16] – Keep costs low.
[7:33] – Diversify your assets.
“When you invest in the market, the key to success is to buy low and sell high.“