10 rules for investing

Your investment goals are as unique as the route you take to reach them. But regardless of your course, we believe these 10 “rules of the road” can help you get where you want to be.

There are 10 Rules that will help you be successful.

1. Develop your strategy.

Your financial advisor gets to know you – your long-term goals, investment time frame and comfort level with risk – before recommending a strategy. The more you can outline what you are trying to achieve, the more he or she can tailor the strategy to you.

Your financial advisor will need to get to understand you—goals, timeframe, and risk tolerance. The more you share with them, the more they can help.

2. Understand risk.

As a rule, the higher the return potential, the more risk you’ll have to accept. To determine what makes sense for you, your financial advisor will want to know:

  • What is your comfort level with risk? Understanding this can help him or her determine how you may react to market ups and downs over time.
  • How much risk are you able to take? The amount of time you have to invest plays an important role in determining how much risk you’re able to take.
  • How much risk do you need to take? Your financial advisor will want to determine the return, and therefore the risk, that may be necessary to reach your long-term goals.

Remember the higher the return, the higher the risk. You’ll need to ask yourself, what is my comfort level with risk? How much risk can I take? How much risk do I need to take? Ask your financial advisor for help to guide you when asking yourself about risk and how that will impact your spending and/or returns.

3. Diversify for a solid foundation.

Your portfolio’s foundation is your asset allocation, or how your investments are diversified among stocks, bonds, cash, international and other investments. Your mix should align with your goals and comfort with risk.

Understanding how to best diversify your portfolio will help you to get your goals achieved. Whether you diversify in products, in specific assets or both, you’ll need to make sure you aren’t dumping all of your money into ONE single investment that could win you money or cost you significantly.

4. Stick with quality.

Of all the factors to consider when investing, (Company name) believes quality is one of the most important. It’s also one of the most overlooked. Although it may be tempting to buy a popular investment, it may not fit with the rest of your portfolio, and it may be riskier than you expect. If it sounds too good to be true, it probably is.

We believe in quality. We believe in tried and true. We believe in helping you with having some standard, responsible investments coupled with some riskier investments to get you maximum returns in the long run.

5. Invest for the long term.

Despite stories of fortunes made on one or two trades, most successful individual investors make their money over time, not overnight. One of the biggest mistakes you can make is trying to “time” the markets.

Do not try to “time” the markets. This is only successful in movies and in rare occasions. You’ll want to keep your investments for the long term.

6. Have realistic expectations.

First, you’ll need to determine the return you’re trying to achieve – which should be the return you need to reach your goals. Then you can base your expectations on your asset allocation, the market environment and your investment time frame.

You won’t be a millionaire overnight. If that’s the first step in getting you on the right path to realistic expectations of how your portfolio will perform.

7. Maintain your balance.

Your portfolio’s mix could drift from its initial objectives from time to time. You can rebalance to reduce areas where your investments are over exposed to certain sectors and/or regions or add to areas where they have little exposure. By rebalancing on a regular basis, you can help ensure your portfolio remains aligned with your objectives and on track to reach your long-term goals.

Maintaining your balance in your investments will help you align your goals and get you to reach your long-term objectives.

8. Prepare for the unexpected.

Unforeseen events could derail what you’re working so hard to achieve. By preparing for the unexpected and building a strategy to address it, you’ll be better positioned to handle the inevitable bumps along the way.

Unforeseen events will help you to weather life’s storms. By giving yourself room to handle life’s bumps, you won’t be frazzled when they inevitably come along.

9. Focus on what you can control.

You can’t control market fluctuations, the economy or the political environment. Instead, you should base your decisions on time-tested investment principles, which include:

  • Diversifying your portfolio
  • Owning quality investments
  • Maintaining a long-term perspective

Focus on your ability to understand time-tested investments. Don’t worry about things you can’t control. Just maintain your portfolio and stick to your guns in the long run.

10. Review your strategy regularly.

The one constant you can expect is change. That’s why it’s so important that you and your financial advisor review your strategy on a regular basis.

Think of your financial advisor as your navigator on this journey. By working together to regularly review your strategy and make the adjustments you need, you can have a clearer picture of where you stand and what you need to do to help reach your goals.

Change is an ever-present constant. Make sure you speak with your financial advisor regularly.

They are your navigator on this journey. They will help you tweak and make changes, so that your portfolio is maximizing its returns for you and will help you reach your financial goals.


David Lee Fang, Analyst: SMS Associates