It is important to achieve financial independence as part of growing in life. The portfolio will not work on its own; you will need to make smart investment decisions, which can be accomplished with a robust investment strategy. Making intelligent and healthy investments will help you reap consistent rewards while avoiding making random and scattered investments without any plan.

A successful and sustainable investment strategy is one that can be communicated, described, and if necessary, documented.  Here are a few suggestions you can include in your strategy

• Note it down –

When you write down your investment strategy, you can see it in context. It helps create a flow of the process and allows for re-examination. By doing so, you will be able to refine the strategy further to fit your financial and personal objectives. You can refer to the written strategy whenever in doubt, as it will explain to you why a fund was selected, the research you conducted, and which of your goals it meets. If your investment objectives change or the market fluctuates, you can review and make changes accordingly.

• Make it Resilient

A good investment strategy is one that can withstand all the ups and downs of the market. In similar fashion to the weather, the market also has booms and lulls. If you are aware of your strategy’s strengths and weaknesses, it will be easier to stay committed to them at times of uncertainty.

• Have beliefs

It is important to understand why funds are overvalued or undervalued and how to leverage them accordingly.  A belief can come from extensive research done, industry knowledge or a strategy to buy funds when the market is low. Consider what works for you and grow your portfolio using that strategy.  Both buying and selling funds should have a defined strategy. Getting out of a stock or mutual fund before it tumbles is an art, and the sooner you master it, the better your portfolio will do. Keep your focus on your goals, remember why you invested, and most importantly, what your purpose is. Be determined and don’t let the herd mentality knock you off your path.

• Measure it

An investment strategy can only be improved or rectified if it can be quantified. Invest in a way that will fulfill your investment objectives, by setting a benchmark. You can make incremental changes to your investment strategy based on the quantified results of your investments. Benchmarks can be Absolute or Relative. Your absolute benchmark would be your target return, for example a 10% annual return. As opposed to a relative benchmark, which would be compared against a passive index. By comparing your investments against your benchmark, you can determine the level of risk you are taking. You can assess this by measuring the return of your investment over time against the return of your investment benchmark.

An investment strategy that is well-planned can produce good returns  consistently over time. It is imperative that you have an investment strategy that is robust enough to function regardless of market conditions and weather whatever storm comes your way.

Need help preparing an investment strategy that is tailored to you and your financial journey? Reach out to our financial planners today.