6 Rules for Successful Investing

Succeeding as an investor isn't hard, but it does take planning and discipline. With the assistance of your financial advisor, the six rules of investing can help you achieve your investment objectives.

1) Live beneath your means.

It sounds simple, but it can be hard to do. The fact is, unless you spend less than you earn, you'll have nothing to invest. Decide how much you want to set aside for investing before you decide how much you're going to spend.

2) Diversify.

You can't predict which way the markets will move or which investments will go up or down. But you spread the risk around by investing in a mix of stocks, bonds, and short-term investments, and by diversifying your assets into these asset classes. That way, when some investments underperform, other investments can carry the load and help you to even out the ups and downs of investing.

3) Keep costs down.

Investment costs reduce your returns. For instance, a fund manager has to produce a high enough return to compensate for the expense ratio. The expense ratio is that percent of the assets used to pay the annual operating, so before chalking up the first dollar of return for the shareholder, the fund manager must deduct expenses. The higher the fund's cost, the higher the hurdle. It's important to find the best ways to control your investment costs.

4) Pay attention to taxes.

While investment costs and inflation take a bite out of your investment return, taxes can take the biggest bite. Your financial advisor can help you to create the right type of investments in the right type of accounts. This is very, very important!

5) Invest for the long run.

It's very difficult to predict the ups and downs of the market, often enough to make market timing a consistently winning strategy.

Frequent buying and selling of investments can increase your taxes and trading costs enough to wipe out any gains. So invest for the long term.

6) Know yourself.

Some people can shrug off big market swings. Others cannot. Finding the right mix of stocks and fixed income to control the volatility of the market to keep you in the game is the name of the game.

Your financial advisor can help you determine your financial temperament and make sure you're truly comfortable with the makeup and allocation of your portfolio.

These rules for investing success are very simple, (not easy to do), however, I believe you can be successful with your investing strategies by following these six simple rules.