1. Don't sell stocks when markets are bad

When stocks are hurtling lower, investors tend to drop investments fast. That's a bad idea, says Orman.

Instead of dumping stock, she advises that you just keep investing the same amount of money each month, regardless of what the market is doing. Using this strategy, a bad month for the market becomes a good month to invest.

"I wish for 2008 again," she told Yahoo Finance, referring to a big market meltdown. "That’s when the fortune was made. That’s when you could buy stocks for pennies on the dollar."

If you train yourself to hold on tight through market dips, you’ll continue to build a solid portfolio with long-term earning potential.

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2. Don't put blind faith in a financial adviser

It's important to have a financial adviser you can trust.

"Don’t think that they’re always going to have your best interest at heart, because probably they have their own best interest at heart,” Orman says.

When selecting a financial professional, make sure he or she is a "fiduciary," which means your adviser has a legal duty to act in your best interest.

During your vetting process, ask prospective advisers about how they'll be compensated for working with you, and about other services they can offer. This will give you a good idea of their motivations when they invest your money.

More: Best investment apps

3. Don't invest for the wrong reasons

Orman says too many people — especially young people — make investment choices purely because a stock seems cool or trendy.

"They decide, 'This company is great, I'm going to invest in that,'" she told CNBC in 2018. If that's your strategy, "maybe you'll hit it right, maybe you'll hit it wrong."

It's less risky to diversify your investing, by putting your money into index funds and exchange-traded funds, or ETFs.

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4. Don't be too quick to buy a home

Homeownership is a big part of the American dream, but today's mortgage rates might make some people think twice.

"Sometimes it makes sense to own a home," Orman told CNBC. "And sometimes, depending on where you live, it makes sense to simply rent."

If you're in an expensive city, Orman says why not invest in the stock market instead of pouring a lot of money into property?

That way, you can grow your savings — maybe into a down payment on the home of your dreams.

More: What is a robo advisor?

5. Just don’t sell stocks — period

Orman speaks from personal experience. In 1997, she invested around $5,000 in Amazon. She sold the stock a few years later and quadrupled her money.

However, the shares would be worth millions today. "It makes me sick to even tabulate it," she told CNBC.

Investing in individual stocks isn’t her favorite game plan, but she says people who play the market should at least do extensive research on the companies they’re interested in. She says Google, Facebook and others are expected to retain their competitive edge for years to come.

“If you do buy, though, make sure to hold," Orman advises. "You keep a great stock forever."

Fine art as an investment

Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.

That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.

Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.

On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.

Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.

Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.

About the Author

Esther Trattner

Esther Trattner

Freelance Contributor

Esther was formerly a freelance contributor to MoneyWise.

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