For many people, the number one personal finance question is how to invest their money in the investment .jpg)
environment we're enduring now.
The choices seem to be to sell everything, or buy more or something in between. My colleague and investment guru Bill Schultheis of SoundmarkWealth Management, LLC in Kirkland summed up the mood of many investors in an email he sent me the other day. Bill observed, “People are really looking for wisdom, but seem, at the same time, to be afraid to act/make a wrong decisions.”
In a very good article about the things investors should NOT do, John Dyer sees negative emotion as driving too much of investor behavior right now. He writes, “Today it’s fear. Tomorrow it’s greed.”
I want to take the opposite approach. To help you figure out what you should do right now, I’m going to post a series of interviews with investment experts from around the Puget Sound. Let’s start with Bill, the author of the great investment book The Coffeehouse Investor. He tells his clients to stick with the basics of investing.
- Asset allocation – choose the best combination of stocks, bonds and cash to provide you with the greatest chance of achieving your financial goals with the least amount of risk.
- Approximate the stock market average – make sure your stock investments are doing as well as what the stock market as a whole is doing
- Save – know how much money you need to set aside each month to reach your financial goals
- Have a good personal burn rate -- spend less than you make
Bill notes that these four principles are in our control and, in these crazy times, feeling in control is a pretty great thing. There’s more to Bill’s approach, of course. If you want to know more and read Bill’s blog, check out his website for Coffeehouse Investors.
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