Successful investing tips

University of Pennsylva- nia professor Jeremy Siegel’s book “Stocks for the Long Run” (McGraw-Hill, $42), first published in 1994, has become a classic. Its success is largely due to the depth of Siegel’s research, which draws from data on investment returns going back to 1802. Here are six “guides to successful investing” that he offers:

1

“Keep your expectations in line with history.” Siegel notes that over long periods, the stock market has averaged annual growth of around 9%. So don’t expect to average, say, 15% or 20%.

2

“Stock returns are much more stable in the long run than in the short run.” The longer your investing time frame, the more of your money should be in stocks rather than bonds.

3

“Invest the largest percentage of your stock portfolio in low-cost stock index funds.” The Motley Fool has also long recommended low-cost index funds, such as those that track the S&P 500 or the entire U.S. or world stock market: That’s the easiest way to earn roughly the market’s return.

4

Invest a meaningful portion of your portfolio in international stocks. Siegel suggests parking a third of your assets in the stock of companies not based in the U.S. You might achieve this in part by buying U.S. stocks that generate much of their revenue abroad. Low-cost index funds that track the world’s stock markets can also be effective.

5

Favor value stocks — those with lower price-to-earnings (P/E) ratios and higher dividend yields — as they have “superior returns and lower risk than growth stocks.” Go ahead and buy some exciting growth stocks if you must, but Siegel prefers stocks that seem undervalued, offering a margin of safety. Great investors such as Warren Buffett would agree.

6

Prepare to be steady in your investing, and not give in to emotion. There’s much wealth to be amassed in stocks, but you’ll need to stay rational, ride out volatility and avoid buying indiscriminately due to greed or selling abruptly due to fear.