What’s the secret? It’s simple really, have a written investment strategy. By my estimates, more than 95% of individual investors don’t have a written investment strategy and even some 85% of financial advisors don’t use them.
This strategy should reflect your principles, values and philosophies about your finances. You’ll rarely refer to this document during a bull market when your investments are increasing in value. On the other hand, when the market is going down and the value of your portfolio is less than you anticipated, the document will become invaluable. During uncertain times, otherwise very rational people tend to make very irrational decisions because their emotions overwhelm their reasoning. That’s why—whether you’re managing your money on your own or you use an advisor—you need to have a written investment strategy in place to remind you of your goals and your plan. As you craft your strategy, don’t be bullied into including any approach that doesn’t match your values or beliefs. This is your investment philosophy, not someone else’s.
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