Top 100 Investment Lessons I Have Learned – Part 2

In part 1, I began the the very enlightening process of identifying the top 100 investment lessons I have learned. As an investor, and a divdend investor, I believe this has been a valuable exercise for me as it has highlighted the things that have worked and that I should continue doing. Here are the next 25 in my list of 100 lessons:

26. Stock tips received at a party should not be acted on unless you are drunk. That way you have an excuse for your stupidity!

27. Excel (or Numbers for Apple) can be just as good or better than Quicken when it comes to tracking your finances.

28. If you use bonds to minimize portfolio volatility, then go shorter rather than longer. Longer term bonds can have just as much volatility as stocks.

29. Corporate bonds are not fixed income and should not be considered as “the safe part of your portfolio”. They are just as volatile and risky as stocks.

30. It only takes $25 per month to start an investment program. That is how I started.

31. On a $1,000,000 portfolio, the average mutual fund will suck $20,000 per year out of you (assuming a 2% MER). The average index fund $1800 (assuming 0.8% MER, which is actually high). Choose wisely.

32. Tax refunds as a result of contributing to a retirement program rock.

33. Reinvesting that same tax refund into mortgage pay down and / or more retirement investments is even better.

34. Taxes suck….but we need some to pay for health care. Taxes are not so we can give some jackass in public office a higher salary.

35. The rule of 72 is a powerful motivating tool.

36. The key to a strong portfolio is not the stocks you pick, but how you put your portfolio together.

37. I have become a better investor over time – I know that passive investing usually beats active investing – however no matter how many years I have been investing some new situation will come out of left field and smack me upside the head.

38. The amount of money I have spent on newsletters in the past would have added a significant amount to my portfolio today. In other words, I have never made substantial money listening (i.e. subscribing) to newsletters.

39. Simple is better. Don’t make things too complicated. If you can’t explain it or understand it, do not put money into it.

40. Systematic deposits into your investment accounts adds up nicely over time.

41. Rebalancing your portfolio is important to keep true to your asset allocation

42. Scrooge McDuck was right, it is important to have some liquidity available for those opportunities that come along (i.e. December 2008)

43. There Are Two Ways to Make Money: People at work and money at work

44. Even the most regular dividend growth stocks can reduce or eliminate dividend increases very quickly. Read: never fall in love with a stock!!

45. Success can be dangerous

46. The best dividend book out there is The Single Best Investment

47. Do not set your expectations for future returns too high – set them lower than you think – that way you will not be disappointed (as much).

48. Don’t chase performance – yesterday’s good thing can (will) be tomorrows dog.

49. If you are buying individual stocks, buy ONLY the best of the best. NEVER compromise

50. Don’t listen to CNBC.

Whew, that was a lot of thinking. Stay tuned for Part 3.