5 Tips for Helping You Stick with Your Investment Strategy

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So, you’ve made an investment strategy, and you’re ready to get started.

That’s great!

Investing is one of the best ways to build wealth over time.

The hard part, though, is sticking with your investment strategy.  How are you going to stay on track?

If you want to make sure that you keep with your investing strategy, here are 5 things you can do to help you maintain your focus:

1. Remember the Big Picture


One of the hardest things to do is keep the big picture in mind when you are investing.

There is always some sort of short-term uncertainty in the economy and in the markets.  And, because we are living in the moment, it’s easy to get caught up in the moment.  But that’s not what you want to do.

What you really need to focus on is the big picture.

What are your goals for your investment portfolio?  Why did you begin investing in the first place?

If you become too obsessed with the present, and the small stuff that happens day to day, you lose track of the big picture.  How do your investments fit into your overall financial plan?  Don’t forget this.  When you are tempted to panic today, and change your investment strategy, re-focus on the big picture, and see that you are probably still on track.

2. Ask Yourself if You Want to Follow the Herd

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When everyone is freaking out, it’s easy to want to freak out, too.  It’s also easy to want to change your investment strategy to jump on the bandwagon of a “hot” new investment — only to find yourself in trouble if the investment bubble bursts.

Following the herd is rarely a good idea, especially when it comes to investments.

Most of the time, the herd is behind what is really happening.  If you follow the herd, chances are you will be stuck buying high or possibly buying low.  Changing your plan to reflect the latest fad investment could end up costing you, and it could throw your investment plan of track in the long run.

3. Keep It Simple

investment strategy

An investment strategy is only as good as how well you stick to it.

One of the best things to do is to keep your investment plan simple.  You want your investment plan to be something that you can execute without too much trouble.  Plus, the simplest investment plans are likely to be the ones that stand the test of time.

If you don’t want your investment plan to fall apart, keeping it simple is a great way to stay on top of things.  Plus, a simple strategy works well with dollar cost averaging.

The simple investment plans also often cost less.  You don’t have to keep actively trading (and spending the money in fees), and you don’t have to worry about short-term volatility quite so much.  Your simple investment plan will be easier to stick with, and you won’t be so quick to abandon your well-thought-out strategy.

4. Don’t Listen to Your Friends

While your friends can offer great advice and support on a number of subjects, realize that few of them are investing geniuses.

The fact of the matter is that you have to be careful when your friends and coworkers start talking about hot stock tips, or trying to get you in on a new thing.  If you change your investment plan to accommodate something that someone you know says, you could find yourself in trouble.  Big trouble.

While your friends and family members might mean well, the truth is that they probably have no idea.  The worst case scenario is that they are actually involved in an investment scam (probably as a dupe), and bringing you along for the ride.  As long as you remember that your friends and family aren’t the best sources for investing tips, you will probably be able to stick to your investment strategy.

5. Shut Out the Noise of the Financial Media

The best way to score viewers and readers is to be sensational.  As a result, financial media can be a terrible place to get information about what you should do for your long-term investment strategy.  Listening to the frantic calls of the financial media can lead to a great deal of trouble for your investment strategy.

Turn off the noise, and you will be more inclined to stick with your strategy, rather than make ill-advised changes.

What other tips would help someone stick to their investment strategy?

Published or updated October 8, 2012.

Comments

  1. Excellent post Miranda, I think your points #s 4 and 5 are especially critical.

  2. Nice post. In particular, I think it’s important to avoid excess ‘noise’ as you put it. Too many people view investing as a daily vice, or sport, where they need to monitor the news at all times and check stock prices constantly. It’s not good to be so reactionary, and frankly I think that most people can actually be better off by focusing that time and energy on making money that can later be invested :)

  3. Jenna, Adaptu Community Manager says:

    Use a tracking tool (like Adaptu). It helps you see the big picture and as you watch the numbers rise, I’m more inspired to keep saving and investing!

  4. Excellent and concise article. The trick, of course, is to have the discipline to stay process oriented, even when short-term investing results may not be going the way you like. It’s human nature to feel like a genius when investments do well, and like a dummy when they languish. Try to put those feelings aside (these tips are really helpful for that), and you should do well.

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