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5 Ways to Recognize a Good Investment Opportunity

By U.S. News & World Report

We all know the basic tenant to successful investing: Buy low and sell high. But this common adage can be difficult to implement, especially when many of your friends and colleagues are doing the opposite. Consider these strategies that will help you identify good investment opportunities and use them for your financial advantage:

[Read: What to Do If Your 401(k) Plan Has High Fees.]

Buy low. Figure out the baseline value for an investment or purchase, and wait to buy it until the purchase price is below what is reasonable. When the stock market drops and other people are panicking and selling, that is the time to look for buying opportunities. Ideally you want to purchase an asset after the price falls significantly, with the expectation that it will rise again in the future and produce a nice return.

Sell high. The time to consider selling an asset is after the price rises dramatically. This is often a time of stock market growth when many people are eager to buy into a rising market. When an investment shows significant gains, this is the ideal time to cash out and lock in your return. You could tuck the income into a safer investment or look for a new underperforming asset to try to repeat your success.

[See: 10 Financial Perks of Getting Older.]

Learn from the storms. While trying to buy low and sell high, you are bound to make some mistakes. If it were easy to buy low and sell high, everyone would do it. When you lose money on an investment, try not to lose sleep over it or give up investing altogether. Perhaps you want to take a break from active investing for a while and capture market returns with an index fund. Or maybe you will learn to more carefully research an investment before putting more than you can comfortably afford to lose on the line. Don’t let fear be the limiting factor that mutes your potential. Rather, let weathering that storm be the fuel that propels you to success.

Use your fear to self-assess. Take inventory of the investments you have made in the past, and think about what you could do to produce better outcomes in the future. There is tremendous insight that can be obtained from physically writing down outcomes you would like to avoid. A written plan can prevent you from making emotional investment decisions in the heat of the moment. If you have a financial planner, tax planner or someone else who will look over your investment ideas, that adds an even deeper layer of reliability and accountability.

[See: How to Reduce Your Tax Bill by Saving for Retirement.]

Create a plan to avoid regret. A large loss can certainly cause you to regret a bad investment decision. But there’s also the regret that comes from watching an investment soar when you could have gotten in on the ground floor. If you take the planning steps of inventorying and then analyzing your investment options, you can help avoid a negative result. Writing it down makes it easier to stick to a plan, especially when friends or pundits might try to tempt you to do otherwise. You can also take the planning process a step further to calibrate your life priorities and how your finances can help you achieve them.

Investing is ultimately about funding the lifestyle that you want to live. Choosing wisely could produce enough wealth to allow you to retire sooner or walk away from an unpleasant job. But you’ll need to use logic and stick to a financial plan to successfully build wealth. Following the latest investment trend isn’t likely to lead to financial success.

Brian Preston and Bo Hanson are fee-only financial planners who host the podcast, “The Money-Guy Show“.

More from U.S. News

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Retirement Savings Tax Breaks for High Earners

5 Ways to Recognize a Good Investment Opportunity originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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