The New York Times had a reasonably useful article on what happens when you manage your own portfolio of investments after you retire. I do manage my own portfolio and was doing that for many years before retirement, so it can be done, but here are a few tips (or hacks if you like modern terminology):
- If you did not manage your investments before retirement, don't just start the moment you retire. Either keep doing it through your financial advisor and/or take courses at your local college before attempting it yourself. It can be confusing due to all the bad information out there from brokers, fast-money artists, and self-promoting "experts".
- Sitting at a computer every day and making trades is not investing a portfolio, it is day-trading.
- Traders do investment transactions every day or week hoping to make money. They usually fail, badly.
- Investors do few transactions and hope to make money over the long term.
- Try to keep costs low by using index ETFs and mutual funds.
- Keep a diversified portfolio allocated according to your risk tolerance and life situation.
- Beware of advice from anyone who gets a commission when you buy or sell securities, particularly securities from their own companies. They have a potential conflict of interest between their financial success and your financial success.
- Brokers or mutual fund salesmen who get a fee when you buy or sell a security, may encourage you to trade in order to increase their commission.
- Fee based planners, who get a flat fee for their services, should not have a conflict of interest.
- If you do not understand or are confused or nervous about a financial decision, wait. Consult a licensed financial planner with a good reputation and family and friends before pulling the trigger.
- If it sounds too good to be true, it probably is.
As always, do not believe everything you read on the Internet, including this blog. Get advice from a competent financial advisor before making important financial decisions.
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