The Rules (Part 1)

What are the tools?

A couple days ago I said that we have the tools to be ready for the uncertain future that lies before us. Some have asked me what I meant by that.

The first rule to follow when you don’t know the future is to diversify. This is a rule as old as the Bible. When trouble hits, if you have your savings split up, some of your money will come through okay.

Second, be patient. It takes years to accumulate a sizable nest-egg. The only beneficiaries of get-rich-quick schemes are the sharks that sell them. When it comes to saving, you have a choice: get rich slowly, or get poor quickly.

Third, stay balanced. If part of your portfolio seems to be getting bigger than it should, don’t be afraid to trim that holding and put the money in an out-of-favor area. Investment fads come and go. By rebalancing, you can take advantage of this.

Finally, be skeptical. Ask for proof. If getting rich were simple, why aren’t more people doing it? But if the world’s going to end, why hasn’t it already? Reviewing history is humbling. If those folks muddled through, why shouldn’t we be able to?

Are these the only tools we’ll need for financial success? No. But like the homeowner with just duct tape and a set of pliers, they’re enough for a start. The rest we can pick up as we need them.

Douglas R. Tengdin, CFA
Chief Investment Officer
Hit reply if you have any questions—I read them all!

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By |2014-09-05T18:37:24+00:00April 12th, 2010|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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