My Investment Strategy

by Krantcents · 21 comments

Post image for My Investment Strategy

My investment strategy is pretty simple!  I do not try to time the market or look for the perfect time to buy or sell.  I keep it simple and it works very well.  I did not bail when the market was diving for the bottom in 2008. As we all know, the stock market is volatile and a sound investment strategy is needed.   Now that I told you about all the things I do not do, I will now share what I do.

Background

As a little background, I have been investing for more than forty (40) years.  I wish I could say, I just read this somewhere and used it successfully.  It would be more believable.  Actually, I started investing and thought I should do it on a regular basis because that is how I put money into savings.  In the early seventies, I set up a payroll deduction to put money into savings for those pesky annual expenses such as real estate taxes, property and life insurance.

Adjusting My Strategy

Recently, I made some changes in my 403B to save money on fees.  When I signed up for my 403B, I thought there was only an annual custodian fee.  To my surprise, there were additional fees.  I made some changes so I could get rid of those onerous fees.  My choice required me to identify a specific date for investment.  Previously, my contribution was received anywhere from a few days after pay day to as much as two weeks later.  So much for consistency by my employer (school district)!

My new arrangement requires me to specify a date to purchase shares in a mutual fund.  Each month, I will add to my investment in a mutual fund.  Investing on the same day regardless how the market is doing is better than any other choice except for investing using perfect timing.  .  Onvesting (Schwab) says an investor with perfect timing (investing on the best day) did slightly better!  Regular investing is almost as good as trying to figure out the best possible day to invest each month.

Timing vs. Dollar Cost Averaging

Timing the market is difficult in a good market never mind a more volatile market.  Buying into the market with a set amount each month is easier than trying to pick the ideal time.  “Dollar cost averaging prevents procrastination, minimizes regret and avoids market timing.”  I focus on my long term investment goals and asset allocation rather than a quick profit.  Instead I set up an Automatic Investment plan for my contributions invested in mutual funds.

Nervous Thinking Is Out

I try to take the emotion out of investing!  I am no different from anybody else; I react to the ups and downs of the market.  I just do not let those ups and downs cause me to react emotionally.  I know the market can swing as much as 10-20% and I am okay with it.  Each month, I am investing in the up and down market for the long run.  If you cannot tolerate these swings, you probably should not be in the market.

Control Issues

For many years, I put the majority of my investments in real estate because I felt I had more control.  Many people would disagree with me!  After all, I had fifty-five (55) leases and anything can happen.  So much is outside of my control, but you can control your risk.  In some ways it is similar to a diverse portfolio or mutual fund, all the stocks usually do not go down in unison.  Rental property is much more a business than investment anyway and I control my risk through good screening.  Asset allocation and diversity are the best ways to reduce your risk.

Final Thoughts

My success with my strategy is due to sticking with a consistent contribution every month in good and bad times.  Annually, I check my asset allocation and diversity to make sure it meets my long term objective. The interesting thing about investing is everyone has a story about a winner or loser.  If my strategy did not work for me, I would be the first one to scrap it.  So set up your payroll deduction and start investing on a regular basis.  You too can have a winning strategy.  That was my investment strategy!

Photo by:  stefan ercshwedner

Please make sure to subscribe to our RSS feed to get the latest updates!

{ 20 comments }

Kurt @ Money Counselor July 30, 2012 at 6:00 am

The toughest part for me if keeping emotion out of investing. Like you, I didn’t bail in 2008, but I fear the stress shortened my life by several years! I’ve found that even when I’m certain I’m making investment decisions on a rational, intellectual basis, I realize in retrospect that emotions really did play a role. Unless a computer program is in control, I think emotional input is nearly impossible for we humans to avoid.

Krantcents July 30, 2012 at 6:44 am

It is okay to be emotional, but don’t let those emotions affect your decisions. Sticking with my plan is similar to shopping with a list, I notice there are other things out there, but I stick with my list.

Miss T @ Prairie Eco-Thrifter July 30, 2012 at 9:22 am

I would agree. Emotion often gets the best of me too. It is really hard to separate yourself from any actions you do. My husband is much better at that.

Krantcents July 30, 2012 at 12:20 pm

I find if I stick with a plan, it is far less emotional. I also try to set criteria that removes emotion from the equation.

Lance@MoneyLife&More July 30, 2012 at 8:32 am

I haven’t been investing that long by I have a plan and am sticking to it so far. I invest a fixed amount every paycheck into funds I have predetermined. I never skip a date and the dollar amounts so far have stayed the same except for increase due to raises/new job salaries. Hopefully it works out for me!

Krantcents July 30, 2012 at 12:15 pm

Regular investing trumps almost everything else.

Kathleen @ Frugal Portland July 30, 2012 at 8:48 am

55 leases? Holy cow that makes me nervous just reading it!

Krantcents July 30, 2012 at 12:17 pm

55 leases represents 2 apartment buildings and a shopping center. One could say I had a diverse portfolio, but it was only diverse geographically because it was still income property.

RichUncle EL July 30, 2012 at 11:50 am

I like the idea of investing in a 401K on a biweekly basis, I also add a certain amount to an after tax investment account for good/cheap stocks. 55 leases you should be retired by now, Good Job.

Krantcents July 30, 2012 at 12:24 pm

Unfortunately, I am paid monthly so I invest monthly with my contribution to my 403B. I did retire a long time ago (38 y.o.) and I returned to work 7 years later to pursue the things I enjoyed. I am still doing the things I like and will retire again in 5 years.

Barbara Friedberg July 30, 2012 at 6:27 pm

Dollar cost averaging is the best way to buy low:). Let me know if you find someone who knows the future for sure. That would be a great way to make big money investing :)

Krantcents July 31, 2012 at 6:51 am

The problem with finding someone who knows the future is you only know that he/she was accurate after the fact. The search may be futile! I think I will stick dollar cost averaging.

AverageJoe July 31, 2012 at 8:51 am

55 leases! I thought one was bad….I’m with Kathleen. That’s a ton of tenants, even if they are in the same 3 spots. I’m almost bald already….that’d finish me off.

Krantcents July 31, 2012 at 10:42 am

There were 3 locations and 2 resident managers. It wasn’t easy, but nothing is!

tribalstylemarketing July 31, 2012 at 10:07 am

Dollar cost averaging is definitely looking good to me right now!

Krantcents July 31, 2012 at 10:46 am

Everyone can start small and add to it as time goes by.

Ornella @ Moneylicious July 31, 2012 at 1:15 pm

loved it! this was an awesome post. Like @Barbara, dollar cost averaging is a great strategy to use…i agree with her.

congrats on diversifying your investment portfolio with real estate…55 leases!! that’s amazing.

Krantcents July 31, 2012 at 2:00 pm

I sold the apartment buildings and shopping center some years ago and invested the money in the market. It helped me reach financial freedom at 38 years old.

Brent Pittman August 1, 2012 at 7:44 am

I haven’t been investing regularly this year since I’ve moved to full time self-employment, besides reinvested dividends. I am anxious to crank it back up when my income levels out a bit.

Krantcents August 1, 2012 at 9:45 am

Although I contribute the maximum amount, it wasn’t always that way. I would start at some minimum level and scale up from there. Remember regular investing and time works in your favor.

{ 1 trackback }

Previous post:

Next post: