Where do you want to go today . . . and tomorrow? If Bill Gates hadn't known where he wanted to go, he probably would have ended up somewhere else. The same goes for your portfolio. If you're saving for a goal that's five, 10 or 20 years away, your reactions to the market's fluctuations will likely be different from those of someone whose focus is on speculation and short-term gains. If the lofty levels of stocks have you spooked, consider dollar-cost averaging into investments you'd like to own. By making smaller purchases on a consistent schedule, you could be in a better position to take advantage of the market's fluctuations without a lot of headaches.
Know thyself. Many people don't know their risk tolerance. Ask yourself how you'd feel if you invested in a stock and two weeks later, only half of your investment was left. If you get sick just thinking about it, then maybe the stock market isn't for you-at least when it comes to investment fads, hot tips and initial public offerings. If you can't afford to lose some money, consider other investments.
See our tips on Tuesday, December 26 through Tuesday, January 2 for parts 1 through 5 of this article, and Thursday, January 4 for part 7 of this article.