Improve Your Financial Morning

At www.happiness-project.com, Gretchen Rubin regularly explores how we might make ourselves happier.

Recently she explained how changes in our morning routine could improve our whole day. For example:

  • If you rush around in a harried state in the morning, you might wake up 30 minutes earlier to give yourself more time to get everything done without stress. Yes, you'll lose some sleep, but you'll start the day in a better mood. (And you can try going to bed 30 minutes earlier, too.)
  • You can save time by doing some tasks the night before: tidy up for 10 minutes, choose the next day's outfit, etc.
  • Try singing to set "a happy tone for everyone" in your household.

What does this have to do with investing? Well, keep reading.

Your financial morning
Try applying this kind of brighten-your-morning thinking to improve your financial life.

Just as we end up with suboptimal results if we rush around in the morning, trying in vain to get everything done, our portfolios can suffer if we rush through or skip some necessary steps in portfolio management.

For example, set aside some time to review your portfolio regularly. If some holdings have grown significantly, you may want to pare them back a mite, so that they don't overshadow everything else. In my own investing, there was a time when my Time Warner (NYSE: TWX  ) stock had grown to dominate my portfolio. (Read about it in "I Turned $3,000 into $210,000.")

While it can make sense to leave your winners alone to keep growing briskly, it's also often smart to pare them back, or even sell them entirely, if they've gotten way ahead of themselves. In retrospect, I wish I'd sold some or all of that holding before it tanked.

The idea of devoting at least 10 minutes per day to tidying up is a powerful one. You can get quite a bit done in a dedicated time period. It's the same with investing. If you rarely find time to keep up with your holdings, you might make doing so part of a regular routine. Maybe, for example, you'll research your holdings for 15 minutes each day when you get home from work. (Or do so at work, perhaps on your lunch hour.) Or, you can devote one or two hours for this, once a week.

Short cuts
Of course, all this is easier said than done. If you can't see yourself devoting time to reviewing your portfolio, you might choose to invest in mutual funds. There are some great ones out there, and they give you the benefit of smart people managing your money for you.

For example, the Vanguard Capital Opportunity (VHCOX) fund has a five-year average annual return of nearly 19%, and recently included the following among its top holdings: Novartis (NYSE: NVS  ) , Monsanto (NYSE: MON  ) , FedEx (NYSE: FDX  ) , and Corning (NYSE: GLW  ) . Although it's closed to new investors, several funds have reopened recently -- or you may have access through your 401(k) at work.

A broad-market index fund will give you roughly the performance of the overall market -- which has been around 10% over long periods of history. That's the simplest way to go with mutual funds, and there's no shame in it. Still, many funds have long-term, market-beating results. Those are the funds I seek -- and you can, too. I've found a bunch of very promising ones via our Motley Fool Champion Funds newsletter. I invite you to check it out -- a free trial includes full access to all past issues, so you can read about each recommendation.

Start off right
Another way to think about mornings and finances is to see this month and this year as the first morning of the rest of your financial life. If you haven't yet opened an IRA, for example, consider doing so as soon as possible. (Learn more in our IRA Center.) You have until April 15 to make a contribution that counts for the 2007 tax year. 

If you haven't yet opened a brokerage account or begun investing in mutual funds, smell the coffee and ask yourself this question: "What am I waiting for?" Your first investing years are your most important and effective ones. Money you invest today might have 20 years to grow, and money you invest 10 years from now will grow by a much smaller factor over the following 10 years.

Make the most of your financial morning.


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