Armchair Millionaire Community Bulletin: Keeping Cool When Investments Get Hot

When the urge hits to try to make a quick buck by following a hot investing tip, it's time to slow down and use a little common sense.

New York, New York (PRWEB) July 27, 2004 -- We invest for a single reason--to make money--so it's very understandable when we get carried away with the possibility of making a lot of money. It certainly happens to the best of us. Here are just two stories from the Armchair Millionaire community about what happens when the urge to strike it rich gets the best of us:

"In the mid 80's, I invested in oil wells based on the advice of a family member who 'knew' the operators. I had not done my research and thought I had to do something (anything) to ensure my future very quickly. I lost a bundle." --Mom2Two

"(Groan) Last summer when a $2,000 investment of mine soared to $12,000 in one month, I should have sold. Instead, I started to dream about it doubling again to $24,000 ... I could take time off work, buy my dad a car, etc. Naturally it sank, slowly but surely. Still waiting for it to come back up. I've learned the hard way, but will never make such a mistake again." --Erin

The good news, of course, is that you don't have to have to get in on the latest "hot" investment in order to be highly successful as an investor. In fact, you'll be much more successful if you steer clear of them altogether and instead stick with a common sense, long-term approach. But how do you do that when enticed with the promise of a quick buck? My checklist provides the key steps.

The Armchair Millionaire's Checklist to Keeping a Cool Head

Be an information investor. There are two different ways you can make investing decisions. The first is by listening to the noise out there--all the financial magazines, television shows and newsletters urging you to act quickly. ("Stocks You Must Buy Now!" is a classic noise headline.) The second way is by listening to information--sound strategies based on how the market actually works over the long run. You want to go the second way.

If you're being pressured, run, don't walk. If someone tries to use high-pressure tactics to sell you on anything, that's a very clear signal for you to make tracks in the opposite direction. And if you're working with a financial advisor, remember that the best advisors--those more interested in helping you reach your financial goals than selling you an investment--will not pressure you to make snap decisions.

If in doubt, hold off. If you're faced with a choice and uncertain of how to act, do nothing until you feel sure you're making the right decision. Slow down. Long-term investment opportunities will still be there tomorrow, next month and next year.

Make a road map and stick with it. Create a long-term investing plan and stick with it. The $1 Million Calculator on ArmchairMillionaire.com will provide you an excellent framework for this kind of plan. If you absolutely must pursue those "hot" investing opportunities, allow yourself only a small portion of your portfolio (no more than 10 percent) as "play" money. Plan to lose this money, because it's likely that eventually you will.

THE BOTTOM LINE: The real secret to investing success is to use your common sense to tap the gains that capital markets make available to every investor. You don't need the latest hot tip to get ahead, you just need to keep cool and be patient.

THE ARMCHAIR MILLIONAIRE WEEKLY SURVEY: Is it better to buy a new or used car? Log on to www.armchairmillionaire.com and let us know.

Lewis Schiff is a contributor to CNNfnMoney.com, the Web sites for CNN and Money Magazine. His newest report, "How to Know When You Are Rich," is now available at www.armchairmillionaire.com.

CONTACT INFORMATION:
Lewis Schiff
Armchair Millionaire
877-833-2823
http://www.armchairmillionaire.com

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