5 key tips for self-directed investors

No. 4: Maintain the plan
No. 4: Maintain the plan © bikeriderlondon/

Devising a thorough financial plan is complicated, but sustaining it isn't easy either. "Everyone needs a roadmap to get to destinations," says Clayton Shearer, a Certified Financial Planner professional who runs Wellness Financial Services in Thornton, Colo. Self-directed investors need to know "how much to invest, a reasonable rate of return to expect and a time frame for the investment," he says.

Devising a written plan that details one's personal investment strategy keeps investors on track. That plan should include a description of how investments will be diversified and the percentage of the portfolio allocated to each one. Since over time the investments will dip or spike at different rates, rebalancing the portfolio annually to conform to the original plan is an important step.

Developing written exit strategies enables self-directed investors to maintain the course. If an individual stock hits your target, it may be time to re-evaluate or sell it and find another growth stock.

When the market plunges, Shearer advises taking a step back and maintaining the plan. "Leave your portfolio alone and let time do its job," he says. Investors who stick to the plan and don't let their emotions overrule can thrive, he says.


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