As the world becomes smaller, all types of factors will affect the markets – from debt in countries such as Greece (and others) to China’s stock market, to something going on in the economy of the world. The questions is what should you do with your investments and John Heinzl writing in the Globe and Mail offered a 5 step plan. Hopefully you have heard many, but they are deserve repeating for part of investing your money is not to lose it.

1. Invest in Quality

You will hear and read about some stocks doubling and going up multiple times in one year; (it was much easier when the world’s markets all fell, but in an seemingly average year, always buy the best or quality companies you can. If you have a reasonably diversified portfolio which gives you dividends, you can ride out the downs and profit even more on the up swings.

2. Thing like a business owner

When you own an asset and it goes up in value do you sell when the price goes up or do you continue with it? It will depend on opportunities but if you own real estate as your home and price goes up do you sell, where do you move to? By ensuring your debt levels are manageable and you have cash flow you do not have to sell when prices are depressed, you can buy more assets,

3. Focus on the long term

Ideally you should buy and hold for 3 to 5 years, which means if today the markets are down, then it is okay. If the market is up today then it is better but you have not hit your targets which allows waiting even better.

4. Count your dividends – not your paper losses.

If you own dividend paying stocks, focus on how well are the dividend paying relative to the other alternatives such as bonds and a bank account. If the companies are doing as expected and continuing to increase their dividends, the market will reward the share prices with a higher multiple. Focus on the cash from the dividends.

5. Keep some cash on hand

The best time to make money on the stock market is after a market had a major correction. This is the time when the quality companies can be bought for less. As the markets improve, the best companies will bounce back fastest and your portfolio assets will increase.

Linking to dividend paying stocks, buying quality stocks which pay a dividend help you ride through the economic cycles of the markets and you will see downturns as great buying opportunities. We all saw bank stocks lose value during the 2008 mortgage back securities fall out, but the best ones have regained and surpassed their previous highs. The market giveth and takes away, but you can benefit from the cycles.

There are more questions than answers, till the next time – to raising questions.