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10 Rules Every Investor Should Know

Experience is the best teacher.  Learn from ours.

Rule #1:   "Street cred" matters.
Rule #2:     Know what you're paying.
Rule #3:     Quality companies drive quality investment results.
Rule #4:     Lifting the floor is more important than raising the roof.
Rule #5:     Diversify.
Rule #6:     Rebalance regularly.
Rule #7:     Do not let emotion drive your decision-making. Stay strategic.
Rule #8:     Invest prudently, think optimistically.
Rule #9:     Remember the taxman.
Rule #10:  Think "big picture."

Share your goals and dreams with the Rockland Trust Investment Management Group. Through customized investment management, trust and estate services, financial planning, retirement planning, and insurance services, our goal is to protect and build your wealth so you can enjoy today and look forward to tomorrow with confidence. 

Rule #1: "Street cred" matters.
Wall Street credentials, that is. You work too hard for your money to entrust it to anyone but the   most capable, competent, and trustworthy managers. The highly respected CFA (Chartered Financial Analyst) designation is the standard of excellence for money managers-and 80% of Rockland Trust's Investment Management Group are CFAs.

The members of our team carry other certifications as well, including CFP (Certified Financial Planner) and CAIA (Chartered Alternative Investment Analyst). Factor in an average of 18 years' industry experience per advisor and it's clear that the Rockland Trust team has the "street cred" that informs intelligent asset management.

Rule #2:  Know what you're paying.
It's your right and responsibility to understand how you're paying your investment manager, because those costs will to some extent offset any investment gains. Financial planners work under three basic billing structures:

Fee Only-You pay only for their advice. The fee may be in the form of an annual retainer, a flat fee or and hourly fee. You pay no commission.
Commission-based-You pay a percentage of each transaction.
Fee-based-You pay a combination of fee and commissions.

The best billing structure for you can depend on the size of your portfolio, the extent of the services your advisor provides, and other variables.

Rule #3:  Quality companies drive quality investment results.
Consider the companies whose stock prices rise over the long term. They usually have strong reputations for innovation, quality products, and top-notch service. As a result, they're profitable, quarter after quarter.

Compare them with flash-in-the-pan companies that may have a clever idea and "buzz," but can't sustain profitability or their stock price. At the end of the day, a company that is successful in its business fundamentals will usually be a successful investment.

Rule #4:  Lifting the floor is more important than raising the roof.
Investments go up, investments go down. An experienced and knowledgeable investment advisor knows that protecting assets in down markets is more valuable than capturing all the upside.  Thoughtful portfolio construction, timely rebalancing, and prudent stewardship can raise the floor - and result in less loss in down markets and more gain throughout your investment horizon.

Rule #5:  Diversify.
Putting all your assets in one investment is a recipe for disappointment, or worse. An experienced investment advisor will spread your assets across a range of vehicles, including:

  •  Different investment types (stocks, bonds, mutual funds)
  •  Different market segments (pharma, tech, energy, etc.)
  •  Different stock capitalizations (small-cap, mid-cap, blue chip)
  •  Different yield horizons (long-term vs. short-term bonds, for instance)

With a diverse portfolio you can better weather market swings and take advantage of more opportunities.

Rule #6:  Rebalance regularly.
Markets change. Your life changes. Your investment goals change. Your investment advisor should periodically review and rebalance your portfolio with you to ensure it's optimized to meet your goals. He or she will examine several factors:

  • Are any investments underperforming?
  • Should you take any gains off the table?
  • Should you reinvest any gains in a better opportunity?
  • Is your balance of stocks, bonds, and cash appropriate?
  • Are your investments risk-appropriate for your goals, risk tolerance, and stage of life?

Rule #7:  Do not let emotion drive your decision-making. Stay strategic.
Which investment practice is more effective: time in the market or timing the market? Today's markets swing wider (and wilder) than ever, and it's easy to say "sell!" when things are looking a little too red. Yet over the long haul, dollar cost averaging has generally netted better results than trying to buy on the lows and sell on the highs of individual stocks.

Rule #8:  Invest prudently, think optimistically.
We'd all love to be "IPO millionaires," feathering our nests with a single well-timed investment. The real world of the average investor just doesn't work that way-but the average investor can confidently build a nice nest egg over time. 

An experienced advisor will look into the future with you and create the best plan and portfolio to help you achieve your goals. Maybe you won't own the glamour stocks. But that's OK when your portfolio contains well-managed businesses in a range of markets, plus bonds and other investments that together position you well for the years to come.

Rule #9:  Remember the taxman.
You have to pay taxes on your investment gains, but that doesn't mean you can't minimize your tax liability. A qualified financial advisor will structure your portfolio and offer guidance on reducing your capital gains tax burden now and the future estate tax burden for your heirs.  

Rule #10:  Think "big picture."
Investing isn't about playing the market. Investing is about building your assets in order to reach your goals for the future: a comfortable retirement, college for your kids, the ability to meet the health care costs of your senior years, and preserving your assets for your heirs.


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