Taking the right steps in the right order, and avoiding the critical mistakes, can get you well on your way to investing success.
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By Jason Stipp | 10-21-11 | 06:00 AM | Email Article

Here at Morningstar, our analysts spend much time and attention each day digging into investments--stocks, bonds, mutual funds, ETFs, and closed-end funds--to help investors uncover those securities with the most promising prospects.

Jason Stipp is Site Editor for Morningstar.com

We know that picking the right investments is a big part of being a successful investor--but it's just one part. Investors' timing (when they buy and sell), their portfolio allocations and concentrations, their temperament (especially in times of market turmoil), and a thoughtfully designed financial foundation (including a realistic budget and a sound emergency fund) have big roles to play in helping us all become better investors.

This week, Morningstar experts, including our director of personal finance Christine Benz, presented a comprehensive plan to better investing in five days. In case you missed any of our reports, you can access the entire week's coverage below, including my quick list of favorites from the week.

Editor's Picks

Day 1: Get Your Financial House in Order
Any good investing plan requires that investors can stick to it. Paying down debt, making space for investments in your budget, and having an emergency fund for unforeseen expenses can ensure that your investing plan can stand on its own two feet, and stay standing.

How to Create a Budget You Can Live With
We all need a budget, regardless of age, life stage, or whether we think we've 'made it' or not. Use our budget worksheet to get your spending and saving on track.

Five Tips for Your Emergency Fund
How to navigate when fear is running high and yields are running low.

Should You Pay Down Debt or Invest?
Add precision to your household's capital allocation decisions.

Bring Your Bills Under Control
Follow these tips to avoid late payments, overpayments, and unnecessary stress.

Five Steps to Debt Reduction
Live simpler and enjoy what you already own.

Are You Adequately Insured Against Risk?
Preventing disasters is more than half of financial success.

Day 2: Ready, Set, Allocate
Asset allocation is one of the most important investment tasks you'll undertake. Get off on the right foot with our tips for uncovering baseline allocations, calculating stock vs. bond splits, sizing your foreign stake, and allocating without a lot of assets.

Find the Right Stock/Bond Mix
Asset allocation is the biggest determinant of how your portfolio behaves.

Build a Well-Diversified Portfolio Without a Lot of Assets
A well-allocated portfolio is not beyond your means.

Is Your Retirement Portfolio's Asset Allocation on Track?
The essential first step for retirement portfolio planning: finding the right stock/bond mix.

What's the Right Foreign Allocation?
Understand how to go global without going out on a limb.

Vanguard: Optimizing International Diversification
A home-country bias isn't necessarily a bad thing for U.S. investors, but a 20%-40% allocation to international still makes sense for most portfolios, says Christopher Philips of Vanguard's Investment Strategy Group.

Tips for Asset Location & Allocation in Retirement Accounts
Morningstar's Christine Benz outlines how a bucket approach can guide allocation and rebalancing decisions in retirement, and offers pointers on distributing asset types across various retirement accounts. (video archive)

Setting Your Fixed-Income Allocation in Retirement
Morningstar's Christine Benz explains why retiree portfolios may not be as bond-heavy as you think, plus offers tips for muni and dividend investors. (video archive)

Day 3: Pick the Best Investments
Wednesday will focus on how to pick the best investments with the underpinnings of Morningstar research, ratings, and favorites lists.

Five Core Stock Funds You Don't Have to Babysit
Our Premium Fund Screener can help you home in on worthy linchpin holdings.

Top Core Bond Funds to Complement an Equity-Heavy Portfolio
These funds aren't exciting, but that's precisely the point.

The Right Investments for Short-Term Goals
Know how to strike the right balance between return potential and loss aversion.

Three Steps to Better Stock Investing
Focusing on competitive advantage, valuation and margins of safety is a winning strategy for stock picking, says Morningstar's Heather Brilliant.

Kinnel's Tips for Fund Picking
Morningstar's director of fund research Russ Kinnel discusses the hallmarks of good index and actively managed mutual funds.

Burns: The Steps to Picking a Good ETF
Before you select a good ETF, select a good investment idea, says Morningstar's Scott Burns.

A Roadmap to Better Closed-End Fund Investing
Morningstar closed-end fund analyst Cara Esser guides investors through the ins and outs of leverage, discount and premiums, and distribution rates.

Day 4: Portfolio Maintenance
On Thursday, we will discuss the importance of rebalancing over time, dollar-cost averaging, and shifting portfolio allocation targets as retirement nears.

Rebalancing Made Simple
Your step-by-step guide to restoring your asset allocation.

Mechanics of Rebalancing
Strategic investors should keep both their most recent and their impending allocation targets in mind when rebalancing their portfolios, says Morningstar's Christine Benz.

Cut the Cost of Rebalancing
If investors wait to rebalance until their targets are off by 5% or more, it would help them maintain their risk-return profile, and also minimize the cost of rebalancing, says Colleen Jaconetti of Vanguard Investment Strategy Group.

How Often Should You Rebalance?
Make changes to your asset-allocation mix only on an as-needed basis.

Keeping Tabs on Your Portfolio
Make sure you're looking at more than just performance.

How Dollar-Cost Averaging Can Smooth Your Returns
This tried-and-true investment method helps investors navigate volatile markets.

Day 5: Avoid Mental Errors
Friday will touch on some of the classic behavioral finance pitfalls, like anchoring and recency bias, and how investors can overcome them.

Avoid These Four Investment Mistakes
A growing field of study can save you from your worst instincts.

Dorsey: Rewire Your Brain for Better Investing
Overcoming mental roadblocks like loss aversion, the endowment effect, and recency bias can have a profound effect on investors' returns, says Sanibel Captiva's Pat Dorsey.

Benz: Learning From My Own Missteps
Morningstar's director of personal finance shares discoveries from her own experience as part of Morningstar's 5 Days to Better Investing.

Zweig: Teach Yourself to Become a Better Investor
An interview with Jason Zweig, author of Your Money and Your Brain. (Morningstar archive)

Benartzi: Getting Past the Barriers to Saving
Investors who sign up to auto-escalate their savings rates and who can picture themselves in retirement are more likely to clear the common hurdles to saving more, says Shlomo Benartzi, chief behavioral economist at Allianz.

Benartzi on Common Retirement Stumbling Blocks
Morningstar's director of personal finance shares discoveries from her own experience as part of Morningstar's 5 Days to Better Investing.

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Jason Stipp does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.
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