7 Smart Investing Tips from Kiplinger Readers

7 Smart Investing Tips from Kiplinger Readers

Each of the seven tips described below can help both experienced and beginning investors improve their investment skills.

Invest in what you understand. To avoid getting caught in a stock-market bubble and to remain calm during an economic downturn, you should know something about a company’s true worth.
Less debt means less risk. Look closely at a company’s balance sheet to determine if a company has too much debt that could hamper the company’s growth or ability to weather an economic storm.
Use dividends to diversify your stock holdings. Instead of reinvesting dividends in the same stock, take cash dividends and use the money to buy stocks in different companies in which you have few holdings.
If you use funds, look under the hood. To diversify your investments, make sure your existing funds don’t own the same stocks in the same companies.
The right stock can replace a bond. Look for high-yield, dividend stocks to replace all or a portion of your bond holdings.
Cash isn’t trash. Cash can be used to take advantage of stock-market downturns or corrections.
Patience is a virtue. Sometimes it just takes time for a stock to increase in value.

Teaching Suggestions

You may want to use the information in this blog post and the original article to

Encourage students to evaluate all potential stock or mutual fund investments.
Stress the importance of patience and the value of a long-term investment program.

Discussion Questions