Successful Investing – Helping Investors Avoid Common Investment Mistakes

The Top Mistakes made by Investors

In my dozen plus years of advising individuals and businesses I have found a number of common mistakes that have derailed even the best laid financial plans. I thought by sharing them I might be able to help others sidestep the pitfalls and the negative impact they can have on your portfolio and long-term financial plans.

1. Failing to establish a time horizon and investing accordingly -

If you have expenses that need to be funded in 3 years or less, you should not be investing the cash for them in the stock market or other risky investments. These monies should be carved out of your investment portfolio (the money earmarked for long-term investing) and invested appropriately in liquid assets such as money market funds or term-certain fixed income offerings. If the money is not going to be needed for 3 years or more, an investment plan should be established based upon specific a time horizon and risk tolerance for these funds.

2. Failing to thoroughly diversify your portfolio -

Many investors know about the concept of diversification and think that by owning different investments, they are diversified. Diversification of an investment portfolio makes good sense on an intuitive level. However, it wasn’t until Harry Markowitz published his model of portfolio selection that this concept became a formalized part of sound investment practice and formed the basis of today’s Modern Portfolio Theory. Beyond this basic concept of diversification, the key to Markowitz’s premise is the revelation that the risk of any investment can be reduced and/or performance increased by forming a portfolio of diverse and non-correlated assets. That is, it is important not just to seek a diversity of asset types, but also to seek assets that have low or near-zero correlations to one another. It’s not about owning different investments; it’s about owning different, non-correlated investments.

3. Letting potential tax implications rule your investment decisions –

Many investors delay selling an investment that has done well regardless of how good or bad the future looks for the holding. Their response is, “I will have to pay taxes if I sell.” By not selling, they set themselves up for not having to pay taxes at all – usually because the investment starts on a decline and their concern switches from “having to pay taxes” to one of “hoping for a turnaround.” Don’t be afraid to take some profits off the table. While taxes are an unpleasant result of investing, I prefer to look at them as a positive sign as it indicates you are making money and your investment plan is working.

4. Buying a stock based upon a “hot tip” -

Too many investors listen to a friend’s advice because he or she always seems to have the next “great” money making idea. They don’t take the time to assess the idea personally and jump in because it’s only a few thousand dollars they are investing. Unfortunately this is not investing – it’s gambling. If you want to gamble, go to Vegas and at least get free drinks, dinner, a show and a room for the risks you are taking. Any investment that is being considered for your portfolio should be thoroughly researched and have passed a comprehensive financial screening scrutiny.

5. Attempting to time the market -

Waiting an extra day, week, or month to try and buy in at the “right price” just doesn’t work. No one can predict the future. If they could they most likely wouldn’t be sharing this knowledge with you for free. Successful investors use time, patience and a disciplined approach to increase the likelihood of maximizing their investment returns – not trying to time the market. If you have done the research and the investment is sound and meets your criteria then buy it, regardless of timing.

6. Failing to regularly reevaluate your investments -

Over time all investment styles, strategies and types fall out of favor. So, like timing the market, it becomes virtually impossible to know what is going to be “hot” in the next bull market and what isn’t. For this reason it is always prudent to stay up-to-date on your investments to insure they are still the same investment that you originally purchased (segment drift and manager changes can be one reason they may have changed). If your investments consist solely of mutual funds then an annual review is a good place to start.

7. Basing investment decisions on emotion -

Maybe the stock market is going through a bad time because of a short-term geo-political or economic event. Stay calm and make an educated, well thought out decisions about what, if anything, to do. Assess whether the event will affect the economy long-term or if it’s just a short-term blip. The best move is often no move at all. If it is a short term incident, many times the smart, prudent investor will make additional investments because the current decline provides them with an excellent buying opportunity. The key to successful investing is to have a disciplined strategy and to stick with it.

8. Cashing out gains and dividends rather than reinvesting -

Once you’ve realized gains or had distributions and dividends paid out, insure they are reinvested back into your portfolio. If you pull out your capital gains, dividends and interest, your money won’t compound as quickly, thereby leaving you with a smaller chunk of change down the line. Letting your investments compound is one of the major tenets of successful investing.

9. Owning too much employer stock -

Many people get over-weighted in employer stock because of options and stock purchase plans made available in today’s competitive compensation packages. While these are great supplements to their annual salary they can put an employee in a position of having too much money invested in their employer’s stock. Additionally, it is quite common for people to invest in “what they know” and what do you know better than the company you work for? To compound the problem many people will add more employer stock to their 401k holdings and individual brokerage accounts. Not only does this create a diversification problem in their portfolio but it also subjects them to excessive single stock risk. A good rule of thumb to follow is to insure that no more than 5-10% of your entire investment portfolio is in any one single stock. If you find yourself in this situation the importance of creating a well thought out reduction strategy cannot be overstated.

10. Following the herd -

The most successful of all investors are moving in the opposite direction of what everyone else is doing. They buy when most are selling and sell when everyone else is buying. By following this simple plan you can preserve your capital and potentially sidestep the next bubble (can anyone remember real estate, internet stocks, and technology growth funds?).

11. Not investing at all –

Somehow in today’s society that Mocha Cappuccino Latte seems to take precedence over saving for the long-term. We are a society who wishes to satisfy the “here and now” rather than the securing our future. The important fact here is that those two are not mutually exclusive. In fact, BALANCE is the key in any long-term endeavor, but by always keeping an eye on the end goal you can make sure it is not out of mind while satiating the here and now.

12. Investing without a plan -

Investing without a plan and lacking the discipline to follow it is a sure way to lower your chances of success. The chances of obtaining any long term goal can be greatly enhanced by creating a strategy, following it and regularly reviewing it frequently enough so it reflects any changes that have taken place since implementation. Many investors start off with a small amount of money and start putting it to work without a plan. As time progresses they find they have a mish-mash of investments in their portfolio with no clear strategy or direction. It’s never too early to invest but it’s even better to invest early with a plan.

13. Taking too little risk -

Some people don’t want to take any risk and cannot stand the volatility involved with risky investments. While it may seem like you are keeping your money safe and secure by not taking risk, it is more than likely you are not because of inflation. If your time horizon is greater than 5 years it is recommended that you have no less than 25-30% in growth investments (i.e. stocks) in your portfolio to ward off the effects of inflation. The actual percentage to own is dependent upon many factors including but not limited to age, time horizon before money is needed, current financial situation, etc. A good general rule of thumb to use as a starting point for the percentage of equity you may include in your portfolio is “120 – your age.”

Improving Your Flight Experience With Southwest Airlines

Despite the economic fares, Southwest Airlines is often criticized for its services and delays. You're at times hear complaints about the lack of punctuality or the discomforts passengers experience while choosing the airline. This is not entirely a true picture. If you've managed to score a good flight deal, this no way means you're in for a bad flight experience.

Here are some helpful tips through which you can score a good seat when flying with Southwest Airlines without ruining your inflight experience.

1. Ask About the Flight

Most of the times, you'll experience a full flight when flying with the airline. When boarding, ask the gate agent about the condition of the flight. If the flight is full, you just have to bear along with others. However, if you have a window or aisle seat, chances are that you'll survive much better than the others!

2. Avoid the C Group

As a rule of thumb, it is a big no to being traveling when you're in the C Group. If you wish to maintain your sanity, avoid it at all possible times, even when you're in the desperate need of flying somewhere. This is where the passengers mostly experience the greatest amount of discomforts. If you've landed there unknowingly, the window and aisle seat will always turn out to be a savior!

3. Opt for the Front

Front seats of the plane are the best when flying with Southwest Airlines. If you've managed to check in early, chances are that you'll land in the front ones and have a peaceful flight. Once that is filled up, passengers are likely to resort to the rear ones. If you're traveling on a lucky day, you might have the front one entirely to yourself.

4. Traveling with a Kid

It's not always bad to take along a young kid with you on your travels. On Southwest flights, most of the passengers would do their best to avoid sitting next to a kid. If you're traveling with one, this is an amazing chance to have some space to yourself. This is not one of the nicest things to be experiencing, but with so much going on it only makes sense!

5. EarlyBird

Instead of begging, yelling or fighting, Southwest Airlines has given you a decent option when it comes to flying with them. The EarlyBird option is a great choice to opt for in this regard and allows you to check in early, against a payment. Although most people would not fancy the idea of ​​paying for the sake of boarding, it is still worth it if you're worried about what seat you'll end up in.

10 Email Marketing Strategies to Dramatically Increase Your Sales

Email marketing is one of the most profitable strategies available to the online entrepreneur (and offline business owners, too).

Consider this: About 99% of your website visitors will leave without buying anything from you on their first visit. But by creating a great opt-in offer you can at least get their contact details — and then use email marketing to follow up, build relationships, and turn them into paying customers.

And email marketing is by far the BEST and CHEAPEST way to stay in touch with your customers and build rock-solid relationships with them — so they’ll buy from you again and again! (This is called the “lifetime value” of your customers, and it’s extremely profitable.)

Email marketing just plain works! Just take a look at these statistics from PostFuture:

  • There are now more than 1 BILLION Internet users worldwide — and 90% of them use email.
  • 70% of users receive opt-in email from online businesses.
  • 82% of online buyers have made at least one purchase in response to an email promotion.
  • 32% have made an immediate online purchase in response to an email.

With numbers like these, you can understand why I’m always stunned to hear about a business that STILL hasn’t started to take advantage of email marketing strategies.

If you’re stuck for ideas on how to use email marketing to ramp up your profits, here are 10 proven email marketing strategies to get you started…

Email marketing strategy #1: Develop relationships and establish credibility by offering free information

Sending your subscribers valuable, free information — such as an authoritative eBook — will help them get to know and trust you. Once you’ve established your credibility, you dramatically increase your chances of converting subscribers into lifelong customers.

You can offer anything from a free report to a free trial version of software… whatever you think your subscribers would like!

Email marketing strategy #2: Encourage repeat visits by announcing regular specials

Once you’ve started collecting email addresses, you can send your customers and subscribers regular updates letting them know what your specials are. Sending regular discount offers is a great way to get your customers familiar with you and your site — and turn them into regulars who will buy from you again and again.

Email marketing strategy #3: Host “Customer Only” events

Suppose you own a restaurant, and you’ve been collecting your customers’ email addresses. You could send each of them an email invitation to an exclusive wine-tasting evening for regular diners only. Rewards like this are one of the best ways to capitalize on the lifetime value of your customers.

If you own an online business, you can set up a special page on your site that is accessible only to customers — and then send them an email telling them how to take advantage of the specials you advertise on that page.

Email marketing strategy #4: Include promotions in appointment reminders

If you are running a service business, as opposed to a retail business, you can still capitalize on the power of email marketing by sending appointment reminders to your clients.

If you’re a karate teacher, for example, you could send your new clients an email three days before their first lesson, reminding them where you are located and when they need to arrive. In that same message, you could include a coupon that offers them 25% off their lessons if they bring a friend to enroll as well!

Email marketing strategy #5: Follow up with your hottest leads

You can use email to follow up with people you have spoken with personally, but who have not made a purchase. Offer to answer any additional questions they may have, and let them know that you are available to speak with them at their convenience. This can dramatically increase your chances of closing a sale by providing your leads with extra information they’re not expecting.

Email marketing strategy #6: Offer electronic “loyalty coupons”

This is a great way to get your existing customers to buy from you again and again. Simply send each of your customers a coupon that they can print and bring with them into your store or use on your website. It is always a good idea to make your coupons valid for a limited time only to motivate your customers to make a purchase from you as soon as possible.

Email marketing strategy #7: Send follow-up offers to your customers

Follow-up offers are one of the most powerful ways to build a profitable business. because they build on the trust you’ve established to close the initial sale — and turn first-time buyers into regular customers.

How profitable can follow-up email be? My team once sent our customers a follow-up email introducing them to a product that we thought they might like. The entire process of writing the email and sending it out took about 20 minutes — and the result was a direct profit of $74,000!

Email marketing strategy #8: Encourage “Send to a Friend” referrals

Email is a great way to encourage referrals because it’s easy for people to forward messages to their families, friends, and coworkers. Make sure every newsletter, offer, or eBook you send to your subscribers reminds them that they can forward your message to anyone they think might be interested.

You could even run a promotion that gives your existing customers something for free every time they personally refer a new customer to you.

Email marketing strategy #9: Deliver your product electronically

Suppose you’ve written a book and you’re currently selling paperback copies through your site for $29 each. By creating a digital version of your book — which is WAY easier than you’re probably thinking — you can simply email it to your customers.

And since you won’t have to worry about things like printing costs, warehousing, packaging, and delivery, you can DRAMATICALLY increase your profit margin!

Email marketing strategy #10: Use email to sell your knowledge and create recurring revenue

If you are an expert on a particular topic — and just about everyone is — then you’ve got a successful business based on a paid-subscription newsletter waiting to be born.

Of course there are tons of other email marketing strategies you can put to use. And once you realize just how easy it is to use it to drive sales, you’ll be thinking of all kinds of new strategies yourself!

A Worm Farm on a Budget

Have you wanted to set up a home worm farm, but been put off by the high cost of purchasing one of the neat “designer label” multi-tiered ” vermicomposting” kits, promoted by garden centers and mail order companies? Well, let’s cut through the crap! – ITS ACTUALLY NO SECRET !!! -You can easily make your own DIY three bin kit for a just a few dollars and your worms will be as happy as little pigs in the yellow stuff, with no big bad wolf in sight. Moreover, you do not need to be an expert handyman to achieve this!

  • Hardware stores, supermarkets and camping outlets sell tough, general purpose black (opaque) plastic storage containers for a very reasonable price. These are usually tapered so that they can be nested to facilitate stacking on the retailer’s shelves and come with a ” snap-fit” ce lid. For your worm farm, you will need three of these tapered containers (but only one lid). For a simple home worm farm I would advise going for 12 gallon (45 liter) containers. Typically, they will be about 15 inches deep (400mm). You can go smaller, if you want.
  • In the first storage container, drill a 3/8 inch (15mm hole), centrally placed, in the side of the bin, just above the base. Insert a inch inch (12mm) cheap plastic barrel or irrigation tap (with washers) into your hole and tighten fast with lock nuts – make sure you get a good seal – test by filling the container with tap water. This container is to be the lowest one in your stack and will retain the highly nutritional ” worm tea ” leachate, that will start dripping down from the composting bins above. Worm tea is a valuable liquid organic fertilizer, that can be diluted and used directly on your organic vegetables.

The two upper bins will actually hold the worms. They are to be identified and are prepared as follows: -

  • Drill a pattern of inch inch (6mm) holes across the entire base of each container for drainage and to allow drainage and the upward migration of the compost worms, these holes should be regularly spaced at approximately two inch (50mm) centers in either direction.
  • For aeration, drill two rows of inch inch (6mm) holes at two inch (50mm) centers, in a continuous band around each of the bins. This band of holes would be about four inches (100mm) below the top rim of the bin.
  • It is not essential to drill holes in the lid, which is closed tightly over the upper bin. As you should get enough air through the sides.
  • You first set up the lower (sump) bin on bricks or blocks, allowing enough space to tap off the fluid from beneath it. Choose a shady location for the worm farm (in a shed or garage, if you are subject to frosts).
  • The second and third bins are “nested” within each other and dropped into the sump bin. To maintain a working space for the worms, and for accumulation of compost, you need a few spacers or packers of about six to eight inches height, between the two upper bins and some smaller packers of about four inches in the lower (sump) bin . You can use wood blocks or sealed food jars for packers. The packers also prevent the tapered worm bins from jamming together.
  • To prevent “nasty bugs” from squeezing in between the bins, you should close ( caulk ) the small gap between them with strips of shade cloth, or mosquito netting.

Now you are ready to go into production. Spacevents us from giving fully detailed notes here for the fine points of operating the system, such as selecting and feeding your worms, eradicating pests and maintaining the worm farm etc – you can visit our website for this information. However, just make sure that you cover the following points: -

  • Set up your worms in the top bin with a good (damp) fibrous bedding (or even shredded newspaper) and after a few days you will be ready to start feeding in your kitchen scraps. Cover the food with more bedding material to discourage pests and keep the lid closed.
  • Make sure the worm farm is never allowed to dry out, by sprinkling water over the bedding periodically, if there is not already enough moisture coming from the food scraps.
  • When the top bin has been fully productive for a while, the worms will multiply and compost will be start accumulating from the worm castings. When the quantity of compost is meaningful, stop putting feed into this bin and swap over the upper two bins by putting bin No 2 to the top of the stack, with bin No 1 now in the middle. Set up this new top bin with clean bedding, a small amount of the old castings and immediately start feeding your kitchen scraps into it. The worms will naturally migrate upwards towards the new food source, leaving the lower bin with only a few stragglers and ready for the harvesting of your compost within about three weeks after the swap.
  • All you need to do is to keep repeating the process of alternating the top two bins on a regular basis, taking out the compost, whenever it accumulates, and tapping off the worm tea from time to time. Use both products in your garden and grow delicious fully organic vegetables and stunning roses. Sit back and enjoy the fruit of your labors – your worms are doing most of the work anyway!

To see a detailed diagram of this simple worm farm, as described, and some illustrative photos, you can visit our web site at http://www.working-worms.com/

Happy worming!