Wise Habits of Successful Investors

• Work with independent investment advisors to avoid conflicts of interest.
• Demand full disclosure of all expenses and compensation to these independent investment managers.
• Favor a fixed fee based advisory agreement or a fee based upon assets under management.
• Focus heavily on asset allocation. Studies have shown that asset allocation is responsible for 91% of portfolio returns (see: Key Investment Principle #4).
• Use passive index investments for the majority of the portfolio. Institutional investors know that a large body of research has proven conclusively that actively managed mutual funds tend to under-perform index funds over the long term (see: Key Investment Principle #7).
• Achieve inflation protection by having a small to moderate allocation to real assets such as real estate, commodities, and/or natural resources.
• Exercise patience and look at returns over three-to-five-year time cycles.

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