To help get you motivated to make progress on your money in 2015, we’re offering up weekly to-dos as part of our inaugural “New Year, True You Challenge” series.
Way to go!
Now it's time to work on taking your money to the next level with an even higher-stakes exercise, which is why this week's challenge is all about helping you to feel more comfortable with ... investing.
Even for veteran investors, the stock market can be intimidating. While there are certain guidelines you can follow, there’s no surefire recipe for success.
Luckily, you can pursue this — without actually laying real money on the line — by setting up a mock investment portfolio.
Basically, think of it as an opportunity to put on a money-management dress rehearsal. “It's a way to have the experience of making classic investing mistakes without destroying your nest egg," says Brad Klontz, CFP®, coauthor of “Mind Over Money.”
The objective isn't to bat 1.000 and never lose a dime but to better comprehend what it takes to be successful — the patience to stick it out.
Week #3 Challenge: Create a Mock Portfolio
Just like an actor goes onstage several days before opening night to get comfortable delivering his lines, setting up a mock portfolio allows wannabe investors to garner some experience prior to buying or selling anything at all.
The execution is pretty simple: First, pick out some investments — stocks that you would, in theory, like to buy — and keep track of them over a period of several months. You can pretend to buy more, sell some, or just stick with what you originally picked.
The objective isn't to bat 1.000 and never lose a dime but to better comprehend what it takes to be successful in the market — a future-oriented mind-set and the patience to stick it out over the long term.
"Ideally, [this exercise] will teach you the value of a passive approach to investing," Klontz says, referring to a low-maintenance strategy that doesn't favor much tinkering with your investments. "The sooner you realize that you can't consistently predict the market, the less [real] money you'll lose."
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.