Investment Strategies: Keep it Simple!

December 02, 2010

Recently while my wife and I were on vacation with my Dad and step-mom, he found some time to talk to me about some new behavioral strategies regarding investment strategies.  I thought some of the things were interesting, such as taking a personality test to help define possible strengths/weaknesses and delving a bit further into a myriad of investing traits.

Now I’m all for learning about investing and especially the behavioral side of why we do what we do, but at the end of the day, successful investors tend to have one thing in common; they stick to their fundamental strategy and leave emotions out of their decisions!

So what did I tell my Dad?  Read, educate yourself, see if you like a different technical analysis system, but in the end, stick to your strategy and don’t be swayed by emotion. Also, break up the time frames when they need money.  For example, any money they need in the next five years, keep in cash.  Doesn’t get much simpler than that.  As their time frame for needing money grows so can their investment choices.

Now it may take some checking in with him, but I think my Dad gets the simplicity concept.  He won’t win every trade but knowing he has protected his profits and minimized his risk at the onset of his investments may allow him to ask me some different questions next time we go on vacation.