Every investor's situation is unique, and you have to make all the right moves that are right for your own situation.

You can use the following list to stimulate your own thinking and make your own checklist and moves.

1. Get the Most from Your Cash:

If you have cash in a money-market fund, you know you're not making much money. You can probably do better than you think if you're willing to do a bit of shopping.


2. Shop for Interest Rates:

If you have money in a bank, find the highest interest rate you can to protect you against inflation.

3. Review Your Emergency Fund:

This should be money you don't think you will need any time soon. Try to make this money work harder for you.

A short-term bond fund will pay more than a money-market fund without much additional risk. If you think you probably won't need this money for four or five years, consider using a fund that owns both stocks and bonds.

4. Check Your Asset Allocation:

The way you allocate your assets is the most important investment decision you will make. Your investment plan should specify your percentage allocations between fixed-income and equity investments.

Within the equity part of the portfolio, you should have target allocations for funds as well as for big-company stock funds and small-company stock funds. Your plan should also specify how much is to be in value stocks and how much in growth stocks.

If you have a financial advisor, set up a meeting to evaluate your current allocation. The advisor can suggest any necessary changes.

5. Rebalance your Investments:

When equities seemed to go through the roof, your investments may have taken you some distance from the proper allocation you determined for yourself.

If you began the new year with a portfolio equally split between stock funds and bond funds, you might be able to change it with about 60 percent of your total in equities and only 40 percent in fixed-income funds. What's wrong with that? Too much risk. A portfolio with 60 percent in equities is riskier than a 50-50 portfolio.

Rebalancing gets you back on track. And thereʼs another benefit:

By rebalancing you will be taking some of last year's profits "off the table" and spreading them around. This is called buying low and selling high. Rebalancing makes it automatic.

6. Diversify:

Maybe you think you're already properly diversified. But the vast majority of portfolios are not that well put together. Most portfolios are heavily over weighted in large-cap growth stocks. That may seem fine in a year like the one we just experienced.

But diversification pays off in good times and bad. It's a rare investor whose equity portfolio couldn't be improved by adding one or more of three kinds of funds:

Value, small-cap and international.

7. Determine Your Investment Policies:

Make a written investment policy statement for yourself. Investors who actually do this are far more likely to attain their goals than those who just casually think about it.

Writing a policy statement requires careful thought, but once it's done it will remind you rationally, when the market is trying to manipulate your emotions, what you should be doing and why.

8. Set Measurable Goals:

Write down your long-term financial goals and make a written retirement plan. That plan should specify a target year you want to retire and estimate how much retirement income you will need from your investments.

From there, you'll be able to tell how big your portfolio will have to be when you retire. For a quick rule of thumb, figure that on the day you retire, your portfolio should be 20 times the size of the annual income you want from that portfolio.

9. Make Specific Plans:

If this is starting to sound like serious work, then you're getting the point. There's no free lunch for somebody who would be a successful investor. But the payoffs from this step could be enormous. You could retire earlier or boost your retirement fund by hundreds of thousands.

At the very least, all this written work will give you a clear picture of where you stand so you don't need to rely on vague hopes or fears. Make a written pre-retirement plan showing how you will accumulate the nest egg you will need on your retirement day.

10. Execution:

Finally, keep looking for more things you can do in the coming years to strengthen your financial muscles.

6. Current assets must be at least double liabilities.

Compounding is a mathematical phenomenon that basically means the longer you stay invested - and reinvest your earnings - the faster your money will grow!

Therefore, the two important keys to taking advantage of the power of compound interest are:

1. Leaving your money invested in the markets for the long run and

2. Reinvesting your income and gains.

Most of us would like to have a million rupee cash at some point in our life. Most of us also work 40+ hours a week at our job. What little amount we save can and will accumulate over the years, but the odds of reaching the 1 million mark is relatively small.

However, if we take advantage of the power of compound interest, then we can begin realizing our 1 million goal.

For instance, let's say you decide to invest 100 per month in an investment that yields 6% interest compounded monthly, for the next 30 years.

In 30 years, you would have 100,451.50!

That's not too bad, considering you made 64,451.50 in interest.

Now, let's say you kept that up another 10 years ...

You would then have 199,149.06.

In 10 years, you almost double the value of your investment.

Investing is taking reasonable risks to earn steady rewards.

Investing works because it allows you to participate in the relentless growth of the world's economy, which hardly follows a straight line, but does trend upward over time. It's also true that the longer you stay invested, the faster your money will grow.

When you are determining your investment strategy you will always have to consider the following three elements:

1. Growth:

Growth is the rate at which your money appreciates during the time it is invested.

If you think you will need access to your funds sooner rather than later, look for an investment that provides a fairly safe and steady growth rate.

Long-term investments that are influenced by factors such as the inflation rate may lose money in the short term, but they can still grow over long-term. What will matter is not a slow growth rate (or even a loss) during a particular period, but a higher growth rate over time.

2. Yield:

Yield is the interest or dividends paid on your investment. Like growth, it can vary in importance depending on your needs.

If you are retired and your investment is funding your retirement, your investments should generate enough yield to let you live on the interest.

Savings accounts tend to yield small percentages. Stocks can yield the highest percentages but also have the greatest risk.

3. Income:

Income is closely related to yield. Does your investment, or the yield from your investment, make up a significant portion of your income.

If so, you may want to be more conservative with your investment choices to ensure that the amount of yield it produces remains consistent and reliable.

You should give careful consideration to where and how often you want to reinvest your money, as it could effect your financial security.

You start investing, and find yourself buying in at the top. Then, prices stumble and you sell, precisely at the bottom.

Unfortunately, many investors are guided by their emotions and allow the mood of the market to dominate their investment decisions.


History has proven that correctly predicting the timing and extent of stock market trends is impossible. This is because world developments and the psychological reactions of people are completely unpredictable. It's no surprise that a foolproof winning formula remains elusive.
One effective strategy for overcoming the emotional hazards of investing is the cost averaging approach that imposes a discipline that relieves the investor of grappling with uncertainty and volatility in the securities markets.

Cost Averaging

Cost averaging is a systematic investment plan involving buying equal amounts of an investment at set intervals -- monthly, quarterly, and so on.

Cost averaging is most prevalently used by investors who don't have lump sums to invest, but would like to accumulate an investment portfolio over time.

Strategically, cost averaging forces investors to be in the market when prices are depressed, but it also forces you to buy when prices are high.

Cost averaging does not assure a profit or protect against loss in declining markets. Because such a strategy involves periodic investment, you should consider your financial ability and willingness to continue purchases through periods of low price levels.

For investors with lump sums to invest, but who are afraid of entering the market prior to a correction, cost averaging will help to ease them into the market.

Value Averaging

Value averaging also capitalizes on the cost averaging systematic approach. It works in much the same way as cost averaging, but with value averaging, you decide on a target amount to invest, then adjust your monthly contributions to maintain that target.

Like cost averaging, value averaging can help lower your average cost per share. But value averaging goes one step further.

Because you end up investing more money when prices are low and fewer when prices are high, you have the opportunity to reduce your average cost per share even further.

It's a strategy that doesn't try to outguess the market's fluctuation, but rather seeks to make those fluctuations work for you.

The earnings season has already started and given the dire circumstances of the global economy, investors are taking a hard look at what stocks are reporting.

Earnings tell investors how much the company earned or lost for its owners (shareholders) in the past quarter.

How do you judge earnings in the middle of the worst economy since the Great Depression?

Investors may have different approaches to this problem. Some may factor in the state of the economy and lower expectations accordingly. This is a good strategy, but you must be careful. Some companies may use the bad economy to hide what would have been a poor performance even in good times.


One way to put some perspective to earnings is to compare the company to its peers. For example, if a sector was down 25% for the quarter, it would not be unreasonable to expect leaders of the sector to do better than that, although they may still be down. Companies that matched (approximately) the sector’s performance could be judged as successful for the quarter. Companies that seriously lag their sector’s performance reveal a level weakness that is dangerous in this environment.

Long-term investors will want to consider why a company is lagging behind its sector. The reasons may prove beneficial in the long run, if detrimental in the short run.

For example, a company may be expanding to grab market share from weaker companies. The short-term impact on earnings may pay handsome dividends when the economy begins moving again.

Unfortunately, weak companies may be in that position because of unwise decisions in the past, such as taking on too much debt or betting the economic growth cycle would never end.

So, the short answer during economic turmoil is the same as it always is: Look for strong companies to not fall behind their peers.

These will be the leaders when the economy begins a serious recovery.

Sell Stocks and always take part of your profits.

One of the most useful strategies is to learn how to sell stocks like a professional. It's easy to buy stocks, but getting out is what separates the professional from the other investors.



Those who try to grab the bottom or top of a price are going to lose in the long run. It is investors who either buy or sell in the middle who will ultimately end up ahead.

There are a lot of experts who say that you will never get poor by taking profits.

No, you will definitetely never get poor. But, neither you will ever get rich by taking a 2% profit in a bull market.

There are two problems with selling that haunt all investors:

First, if you hold out for a better price, there is a chance your gains can go back to even or you could run your gain into a loss. And just as annoying is when you sell stocks for a quick gain only to watch it shoot up like a rocket.

You can frequently miss the really big gains or get into a loss situation as a result of selling or not selling. This will always keep you perpetually confused and constantly frustrated.

Stock at new highs has much more of an open running field because no one ahead of you is at a loss and wants to get out at the first opportunity.

Everybody has a profit & Everybody is happy.

Now, this is the perfect time to be better prepared than competition and be ready to sell. Once a stock you own rises by 15% or more, it is foolish not to pull at least some part of your profits off the table.

Stocks usually have a tendency to advance 15% to 25%, then decline before they take off again.

Many of us have witnessed several of our stock selections rise 15% or more over a period of several days. You have to be disciplined enough to take at least part of your profits at this resistance point. If you follow this reasonable profit objective, you will make a nice profit and definately never lose any money.