The best tool you can have is often the one you create yourself. One of my favorite tools are pusher sticks for my table saw. A pusher stick makes it possible to push a piece of wood through the table saw without having your hand close to the blade. If you read the lawyer-speak on the instructions for a table saw, it is likely that the instructions tell you to avoid putting your hand or fingers on the spinning blade. I have a friend who did not comply, and he cut his hand as a result.
Investors should use a pusher stick too. The best one is the one you can create for yourself. It is called a PLAN. A written investment plan prevents serious damage to your long-term goals. A good plan contains the following elements:
1. A goal. What is your objective? For me, I stated my goal to be based on a desire to maximize portfolio growth and keep the current investments even while the government-mandated RMD’s are being withdrawn from my traditional IRA. My original goal statement is shown below.
2. Rules for buying investments. Every investment should pass muster. That means you should have 5-10 things you consider before you buy an investment. This is IMPORTANT!
3. Rules for selling investments. This rule set is vital. It prevents serious injury to your portfolio.
4. Things you won’t buy. For example, I won’t spend my time trading options, buying futures, selling short or buying any high-cost ETF or mutual fund. I also avoid MLP’s (Master Limited Partnerships.)
Don’t cut off your fingers when using a table saw. Build a tool or buy one to prevent loss of blood.
Don’t cut off your investments using knee-jerk emotional responses. Have a written plan.
Wayne’s original goal statement:
Generate a steadily increasing stream of dividends paid by excellent, low-risk companies or ETFs.
Numerical objective: Grow dividend income to $80,000 in four years – when I am 70 years old. (This objective has already been met and has been adjusted.)
Dividends eventually will be withdrawn as RMD’s from the non-ROTH IRA accounts so that income-producing investments will not be sold to fund RMD’s if possible.
If you need help with this, please reach out and I will help you.
Fidelity Viewpoints (01/15/2019) lists this tool as the first item of business for successful investors: “Develop a long-term plan—and stick with it.” LINK: https://www.fidelity.com/viewpoints/investing-ideas/six-habits-successful-investors