How to Choose the Best Investments - 6 Dos and Don’ts to Follow

A common question I receive is how to choose the best investments. Most people want to build wealth for the future, but they also don’t want to lose money.

The reality is that not taking enough investment risk might actually be the riskiest move of all! That’s because you could fall short of your goals or run out of money during retirement.

Taking calculated investment risk is an important part of your financial life. Without it, your money won’t grow fast enough to achieve your long-term goals.

But if you’re not sure which investments will create financial security without taking too much risk, it can be difficult to get started. In this post, I’ll cut through the confusion with six dos and don’ts that make it easy to invest with confidence.

6 Dos and Don’ts for Choosing the Best Investments

1. Do invest small rather than not at all.
2. Don’t pick individual stocks.
3. Do choose diversified investment funds.
4. Don’t take too much risk.
5. Do invest through a tax-advantaged account.
6. Don’t be afraid to ask for investment help.

Here’s more detail about each of these key investing dos and don’ts.

1. Do invest small rather than not at all.

Before you do any investing, your first financial priority should be to accumulate some amount of emergency savings. That’s how you avoid getting into financial trouble if you have a large, unexpected expense or you lose your job or business income.

Ideally, everyone should have a minimum of three to six months’ worth of their living expenses tucked away in an FDIC-insured bank savings account. If that seems unattainable, start by saving a reasonable amount, such as $500 or $1,000. Then work on building your emergency savings at the same time you invest for the future.

Getting in the habit of investing sooner, rather than having to invest more money later, is the secret to investment success.

Getting in the habit of investing sooner, rather than having to invest more money later, is the secret to investment success. Investors who start late usually have to make huge financial sacrifices to accumulate enough money to reach their goals—or they’re forced to work much longer than they want to.

It doesn’t matter if you can only put away small amounts each month; not getting started right now is a costly mistake. So, if you’ve been putting off investing...

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