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7 Simple Steps for Successful Investing

7 Simple Steps for Successful Investing

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As a family man, I know that providing for a family while planning for retirement can be stressful. When my wife and I first started to raise our children, we often worried about how we were going to pay bills, save for their college and plan for our retirement – all at the same time. These worries led to us having financial planning conversations with our close friends and colleagues. In turn, our discussions developed into a priceless resource that helped us build a solid financial plan for our family’s future. It also led me to be even more deliberate in the conversations I have with clients in my professional career as an advisor.

In a world where unlimited information can be found on the internet, television and social media, the path to financial wellness can become confusing, and at times, overwhelming. Whether you are saving for your children’s education or thinking about the income you need for retirement, I can’t think of a better time than now to start a conversation.

An important tool for long-term investors are guiding principles to help them stay focused and on track to achieve their goals. With my clients, I talk about these seven fundamentals that are essential to successful investing:

1. Establish a financial plan based on your goals. Many of us have several financial goals—save for retirement, college for our children, and a home—to name a few. The first step to making progress toward those goals is creating a plan to reach them. The 2004 Health and Retirement Study of Americans over the age of 50 showed that those who created financial plans and stuck with them achieved an average total net worth three times higher than those who didn’t.

2. Start saving and investing today. Building wealth is a long-term endeavor and for long-term investors, time in the market is more important than attempting to time the market. Your level of savings is the biggest factor in determining whether you can meet your financial goals. And the earlier you start saving and investing, the more time your contributions have to potentially grow, thanks to the power of compounding.

3. Build a diversified portfolio based on your tolerance for risk. Allocate your money across asset classes, such as stocks, bonds and cash investments, and within each asset class, across different sectors and geographies. To determine what allocation mix is right for you, it’s important to understand your tolerance for potential losses, which is dependent on your time horizon and comfort with volatility. For example, if you have a mortgage, your own business and kids approaching college, you may be less likely to ride out a bear market-given your income needs-than if you are single and not holding any major debt.

4. Minimize fees and taxes. Markets can be unpredictable, so control what you know, such as investing fees. A seemingly small difference in fees can potentially make a big difference over time. Regularly review your statement and ask your financial advisor directly about the different fees you are paying, why you’re paying them and how they are impacting your returns and progress toward financial goals. It’s also important to always consider tax-efficient investing strategies, such as tax-loss harvesting, which may allow you to offset taxable investment gains with taxable investment losses, lowering your current tax bill and leaving you with more money to invest and potentially grow.

5. Build in protection against significant losses. If you experienced the tech bubble burst in 2000 or the 2008 financial crisis as an investor, you know it can take years to recover—emotionally and in your portfolio. Holding cash and other defensive assets like bonds to hedge your portfolio can help provide stability and potentially counteract big stock declines.

6. Rebalance your portfolio regularly. Forgetting to rebalance is like letting the current steer your boat—you’ll likely end up off course. Keep your portfolio aligned with your goals and risk tolerance. Letting asset classes “drift” can eventually expose your portfolio to a level of risk that feels uncomfortable, and could cause you to make knee-jerk, and potentially costly, decisions.

7. Ignore the noise. Markets will always fluctuate in the short-term, but whether they’re moving up or down, long-term investors should ignore the noise. Instead, stay focused on making progress toward your goals and stick to your financial plan.

Similar to making a commitment to live a healthier lifestyle, achieving financial wellness takes time and discipline. If you start to apply one or all of the above principles, they can help you move one step closer toward financial freedom. It is never too late to get started, and as the old saying goes, “there is no better time than the present.”

Although there are many ways to achieve your financial goals, I believe that every plan starts with a conversation – and I am here to listen. I look forward to our first conversation.

David Shelly is the Branch Leader at Charles Schwab Independent Branch in Egg Harbor with over 25 years of experience helping clients achieve their financial goals. Some content provided here has been compiled from previously published articles authored by various parties at Schwab.


The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

Diversification strategies do not ensure a profit and do not protect against losses in declining markets.

Rebalancing may cause investors to incur transaction costs and, when rebalancing a non-retirement account, taxable events may be created that may increase your tax liability. Rebalancing a portfolio cannot ensure a profit or protect against a loss in any given market environment.

This information does not constitute and is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner, or investment manager. (0220-04TZ)

David Shelly headshot
  • David Shelly
  • Charles Schwab, Independent Branch Leader and Financial Consultant
  • Branch Details
  • Egg Harbor-Independent Branch
  • 430 Consumer Square, Mays Landing, NJ 08330
  • 609-910-4807

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