Ten Principles to Bulletproof Your Portfolio, Part 1

By Alexander Green We live in an uncertain world.

Economies expand and contract. Interest rates rise and fall. Markets gyrate up and down.

And nobody gives you a warning.

It’s a bit unsettling, especially when your life savings are on the line.

Wouldn’t it be great if you could bulletproof your investments, so you’re prepared for whatever the future holds?

In fact, you can. You need only follow 10 battle-tested principles that have stood the test of time…
1. Don’t try to forecast the economy.
The national and global economy today is too big, too dynamic and way too complex for anyone – from corporate executives to central bank presidents – to accurately predict.

So if you’re running your portfolio based on someone’s guess about how long the economic expansion will last or when the next recession will arrive, you’re already off on the wrong foot.

Twice a year, The Wall Street Journal polls 55 of the nation’s leading economists and asks what lies ahead for the economy, interest rates, inflation and the dollar. Most are way off. (Their consensus isn’t so hot either.)

It’s gotten to the point where even The Wall Street Journal staff is in on the joke. Reporter Jesse Eisinger wrote, “Pity the poor Wall Street economist. Big staffs, sophisticated models, reams of historical data, degrees from schools known by merely the name of the biggest benefactor, and still they forecast about as well as groundhogs.”

Punxsutawney Phil may actually have an edge on most of them.
2. Don’t time the market.
It seems so easy when you look at a chart of past bull and bear markets. If only you’d gotten in down here, and then out somewhere up there, and then back in around here.

As they say in New York, “fuhgeddaboudit.”

Trying to switch into the market for the rallies and out for the corrections – or even just trying to call the major turns every decade or so – is a waste of time and money.

It can’t be done.

Sure, anyone can make a good call. (And don’t think they won’t keep reminding you.) But to successfully time the market, you have to make at least three. You have to buy at the right time, get out at the right time, and then buy back in the right time. Otherwise, the plane will leave you at the airport… since the long-term direction of the stock market is up.

Vanguard founder Jack Bogle calls market timing “the loser’s game.” He adds, “After 50 years in this business, I do not know anybody who has done it successfully and consistently. I don’t even know anybody who knows anybody who’s done it.”

3. Save more.
The 2016 Retirement Confidence Survey revealed that millions of Americans are woefully unprepared for retirement. The single biggest reason is they haven’t saved enough.

More than a quarter of Americans (26%) have put aside less than $1,000 for retirement. Forty-two percent have saved less than $10,000. And the majority (58%) has accumulated less than $25,000.

Millions of Americans today believe the government will deliver the material happiness they deserve, sparing them the trouble and …read more

Source:: Investment You

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