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How to Formulate an Investment Strategy

As an avid investor, the first step to staying on top of your financial goals is to create a quantifiable, realistic and actionable investment strategy.  If done right, this strategy will help inform your investment decisions and encourage consistent performance.

Here are 5 tried-and-true tips that will help you formulate a killer investment strategy.

  1. Set clear, well-defined and realistic goals

You must be able to pin-point what your financial goals are. Before you go down this route, you must understand where you are heading to. As such, you need to define and document both your long-term and short-term goals, a step that will help you figure out your investment personality, you can read more about it at Savings Report.

For instance, do you intend to invest in purely real estate or are you a hybrid investor who gets his feet wet in multiple investment vehicles? Your goals should be crystal-clear and achievable. Don’t say you want to make money in flipping fixer-uppers, instead, state that you want to make at least $100,000 in a year.

  1. Set your investment timeframe

In addition to setting investment goals, you also need to think about the timeframe you need to achieve those objectives. For example, you have a 10-year or 20-year investment timeframe; you have more time to withstand market upsets, and so would be able to consider investment options with more risk but better returns in the long haul. On the other hand, if your investment timeframe is 1 or 2 years, you might want to be too careful with your options.

  1. Calculate your monthly savings

Talking of savings, you should determine how much you need to save every month. If you want to save $1million by the time you’re 60, how much do you want to at the end of each month? Be realistic with this amount so you don’t affect your overall quality of life.

  1. Consider long-term investments

Rather than wait until the end of the year and check how much is there to save, put your long-term savings and investments top of mind. That means that you should set aside some money in your savings account to start investing in your retirement fund, 401(k) or any other worthy investment vehicles.

  1. Put a risk management plan in place

Perhaps the most important thing to do is create a risk management strategy. First of all, you need to figure out what your risks are, and devise ways to mitigating those risks.


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