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3 Lessons Investors Can Learn from Black Friday Shoppers

Joe O'Boyle

It is common to see the principles and lessons learned from one industry be translated and applied successfully to another.

The leadership teachings of famed UCLA basketball coach John Wooden are studied and followed by CEOs worldwide. The "lean manufacturing" methods popularized by Toyota Motor Corp. (ticker: TOY) are being applied to the tech world and emulated across Silicon Valley.

Today, we examine a few best practices of the Black Friday bargain shopper that can be successfully applied by today's investors.

Start early. For many Black Friday shoppers, the season of savings began weeks before the big holiday shopping weekend. These "savings experts" collected Black Friday ads from all their top retailers and thoughtfully strategized how to spend their precious time and money on that chilly November morning. When the doors flew open at the local department store, these shoppers knew exactly what they were buying, where their targeted items were and the quickest route to the register.

Similarly, many successful investors also started planning for their retirement long before you may realize. By starting early and having a strategic plan to reach their goals, the savviest investors allow their retirement assets the opportunity to compound and grow over time.

Albert Einstein called compound interest, "the eighth wonder of the world." He said, "He who understands it, earns it ... he who doesn't ... pays it." It's up to you to decide if you want to start planning early to earn it.

Buy low. Buying low is certainly among the most obvious of rules when it comes to bargain shopping or investing. The lower the price you pay for a quality item, the better the deal you are getting. For bargain shoppers, buying low means buying on sale and spending less than you otherwise would.

Interestingly, when investing, buying low also seems obvious. You should wait for a time period when assets' prices are lower and accumulate quality businesses and real estate if you feel the time is right. However, a funny thing happens when markets decline -- investors often act emotionally and sell out of the fear of a greater loss.

Of course, past performance does not guarantee future results. But for long-term investors, market declines may represent a great time to take advantage of the volatility and continue to build quality investment positions for the long term.

Exercise patience and discipline. Black Friday bargain shoppers patiently waited all year long for their savings opportunity to arrive. They carefully crafted their purchasing plan and had the discipline to wait for their optimal price. When the big sale arrived, long lines or herds of competitors scrambling for their spot at the front did not discourage them. For the bargain hunter, patience and exercising discipline are virtues that enhance their bottom line.

The same patience and discipline is required when managing your retirement investments. Create a savings and investment plan that is designed to help you reach your financial goals. Maintain the patience and discipline to stick with your plan in the face of normal market volatility and do not be discouraged by the short-term bumps along the way.

We encourage investors to start early, buy low and have the discipline to stay the course with their financial plans.



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