5 key tips for self-directed investors

No. 3: Research
No. 3: Research © JohnKwan/

Thoughtful investing requires "research and more research," says Allan Katz, president of Comprehensive Wealth Management Group on Staten Island, N.Y.

Many do-it-yourself investors see things from a limited viewpoint. They look to see how the stock market is performing and whether it's up or down, but that doesn't constitute sufficient research.

When researching funds, self-directed investors can easily identify the top performing mutual funds in the last year and look at their fees. But limited information is not enough to make good decisions. "As the saying goes, past performance offers no guarantees of future performance," Katz says. A five-star mutual fund that excelled in 2013 may be due for a setback in 2014, he adds.

Read a fund's prospectus and annual report, analyze the fund's holdings and the manager's investment style, and determine how it fits into your portfolio before making a purchase decision.

Investing in stocks requires even more careful research and knowledge.


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