Most investing advice may come from a well-intentioned place, but it’s often not something you should actually listen to.
Many people have philosophies that actually can hurt your portfolio. When someone tells you to sell your winners to lock in profits, they may also be telling you to limit future profits by selling shares in a good company
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The same goes for the old advice to set a stop/loss order to protect your portfolio. The problem is some very good stocks over time have had large drops. If you sell because of that drop, you may end up regretting it even though you spared yourself some short-term pain.
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In reality, you only need a few pieces of investing advice to build your portfolio on. The first is to buy good companies not companies you think will go up.
You might make money forecasting the various bounces of GameStop or AMC, but it’s hard to argue that either is an inherently good business.
There’s one other thing you can do as an investor but the problem is that once someone tells you this, the opportunity has passed.
In a time of financial uncertainty, TheStreet.com co-editor Dan Kline thought it was worth braving a windy deck onboard a Celebrity Cruises ship to share it with you.
This is the best investing advice I have ever heard (1:28)
Invest in stocks early and often
Transcript:
Dan Kline: Hey there, investors. I am Dan Kline, co-editor of TheStreet, along with my friend Todd Campbell. I wanted to give the best piece of advice for investing that nobody ever gave me.
Now, this isn’t because my parents were not good parents. It’s not because my teachers were not good teachers. It’s because people didn’t think that way.
And the number one thing you should do as a parent is tell your kids to invest early. Frankly, make your kids invest early. So my son, when he got his first job working at a Wendy’s, I made him take a percentage of his income every week and invest it in the stock market.
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What did he buy? He bought companies he understood. He owned shares of Microsoft.
He owned shares of Target. He owned shares of Starbucks.
He probably owned shares of Walt Disney. I’m not sure. But it is things he understands, but more importantly, it reinforces that habit.
And if you put very small amounts of money into the market and then let it sit for 40 years, the return on that is going to be exponential. So if you look at a 9% average return and you’re buying blue chip, really safe companies.
Don’t let your kid chase the latest fad. Have them buy the companies that are part of their everyday world.
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Your kid will get to 45, 50, 60, and be rich. More importantly, your kid will get to 30 and have the down payment to buy a house. So the hardest time to save is early on when you make the least money.
But if you get them to save while they still live at your house, while they don’t have any expenses, that gets that habit, gets it going. There is more great advice at TheStreet.com. I am Dan Kline.
Come see me there.