JP Morgan Chase is one of the nation's largest companies, employing thousands of smart people. Yet their CEO Jamie Dimon admits that executives blew it in picking a risky derivative investment strategy that has cost Chase $2 billion.
Deerfield Beach financial advisor Charles Nichols says there are 3 ways to avoid your own investment meltdown:
Pick and track your investments closely. Chase's CEO Dimon now says the bank's new investment strategy was "poorly reviewed, poorly executed, and poorly monitored." But you have to be careful in choosing an investment and then watching it, financial advisor Nichols said. "Clearly, in this ever-changing world, a 'set it and forget it' investment strategy won't cut it," he said.
Keep it simple. Trading fancy derivatives or investing in things you don't understand will lead to your downfall, said Nichols, author of the book, The Real Truth About Your Money. It's better to understand your investments -- and how they can not only make money but lose fortunes, he said.
Be humble. Don't get overconfident in thinking you can pick investment wonders. "It's better to worry about what could go wrong -- and plan for it -- than think you're invincible," Nichols said in an e-mail.
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