Having a highly effective investing strategy is quite rare for the average investor, even being above the market average is quite rare for the average investor. This is because most investors now a days do not value or follow the strategy of riding the market rather than timing it. Maybe this is because most investors find this quite boring, many investors fall into the trap of boredom and eventually give in to the inner gambler who invests spontaneously and based on speculation. So, in this article I will go through the top 6 ways to create a highly effective investing strategy.
1) Start by setting clear financial goals for yourself.
This will help you determine the appropriate mix of investments for your portfolio. The first step for setting the right goals for yourself is to know oneself, know the situation you’re in and what situation you want to be in.
3) Consider your time horizon and risk tolerance. If you have a long time horizon and a high risk tolerance, you may be able to afford to take on more risk in your portfolio. If you have a shorter time horizon or a lower risk tolerance, you may want to allocate more of your portfolio to less risky investments.
4) Keep an eye on fees. High fees can eat into your investment returns, so be sure to choose low-cost options whenever possible. Just as compound interest works for growth it also works the other way around, make sure you’re not paying any insanely high fees on any of your investments. An example of high fees would be anything over 1% annually for funds and index funds
5) Review your portfolio regularly and make adjustments as needed.
As your financial goals or circumstances change, you may need to adjust your portfolio to ensure it aligns with your new goals. Note that this only applies to the active investor, not the passive investor aiming for long term growth through compound interest. One of the most important rules to follow after making a highly successful investment strategy is sticking with it.
6) Seek professional advice if needed. If you’re not confident in your ability to create and manage an investment portfolio, you may want to consider working with a financial advisor. This can dramatically increase the luxury of your portfolio, but if that’s not an option you could also invest time and effort into becoming financially intelligent.
Now, we have to get something straightened out. If you know yourself to not help being affected by the temporary swings in the market (Completely fine, this category actually covers most of investors), then the absolute best way to invest is to set up an automatic system that invests every single month in a few carefully chosen index funds. The meaning of this simple but boring strategy is to invest for compound interest and only ride the market and never actually look or touch your portfolio. A tip for this would be to set up the strategy so it’s running flawlessly in the background and then don’t look at your portfolio for the next 10-20 years. You will be amazed at the power compound interest have.
Either way, whatever investing strategy you use, always do your research and due diligence on every investment you make. Go through the steps above, do your research, set up your investing strategy and be set for life.
Thank you for reading
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