I was recently helping a young man who was just starting his career.
He was looking to select a fund to get started in investing. Several points should be stressed for an early career person and investing.
These are general points, but they should be pondered carefully before jumping in.
- Equity funds are usually best when you have long periods till the funds are needed (15+ years).
- Use compounding to your advantage. Never "raid" your retirement for other expenditures. It can vastly decrease your long term returns.
- Watch ALL fees and minimize them at every chance. They are great for the broker or mutual fund, but bad for the investor. Small fees DO make a difference in your returns.
- Don't chase returns. Make a wise choice of funds and stick with them for some time. Things take time to evolve. Look for good returns for long periods - such as 10 years as it shows consistency.
-Educate yourself. Read, read and read. Don't pass off monitoring your portfolio to someone else without checking up on them. This is a recipe for disaster or less than appropriate returns.
It is a long journey to financial security in retirement. Take the RIGHT first steps!
