Ten Guideposts for Investing
Article By: Chris Merchant, CFP®, Author of On Investing Well: The Elements of Good Investing
There’s no surefire formula for investing success, but there are some tried and true principles that can help you build a solid foundation. Here are ten guideposts to keep in mind as you develop your investment strategy:
- Listen to Wisdom and Ignore Information. The noise coming from the market will only distract you from your investing strategy.
- Use the Right Timeframe for Your Goal. Long-term goals require long-term investments; short-term goals require short-term investments.
- Do Not Try to Beat or Time the Market. Both are losing games for private investors. Be content with the returns the market gives you.
- Do Take on Appropriates Amounts of Risk. Regardless of your goal’s time frame, you need to be able to beat inflation in order to achieve a return.
- Diversify by Asset Class and Sector. Never put all your eggs in one basket. If it breaks, so will all your eggs.
- Have a Strategy and Execute It. Develop a strategy based on sound principles, then execute it by investing regularly.
- Value Simple Processes. Complexity usually reduces or eliminates returns.
- Speculate Responsibly. If you must speculate, never use more than 10% of our portfolio and never top up your speculating account.
- Focus on What You Can Control. Focusing on anything else is a waste of time and will cost you returns.
- Re-train Your Internal Biases. Work to govern your emotions so you don’t trade based on them. Always fall back on your investing values and strategy.
So, there you have it! Our guideposts for a successful investing journey.
By following these ten simple guidelines, you’ll be well on your way to developing a sound investment strategy that can help you reach your financial goals.
If you need help getting started or getting back on track, we’d be more than happy to chat with you about your specific situation.
In the meantime, happy investing!
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