What Is Your Investment Strategy?

As I await my final statements for the month of April, I was thinking about my current investment portfolio and what changes, if any, I need to make.

I previously admitted that I went through a long period of time where I didn’t care bother to track or deal with my investments. Just based on this, my portfolio probably needs to be reworked. But there are now other factors at work.

My mindset and goals are in a completely different place than they were when I started investing 20 years ago. My wife and I always planned to retire early. But early to us meant sometime in our mid to late 50’s back then. Because of this our investment approach was the set it and forget it method. Just set up your options, contribute regularly and rebalance occasionally. After all, this is what our financial advisor at the time said was the best way so we could retire comfortably in our mid 60’s. Wait, did she just say 60’s?!!

I am not a timid investor by any means. I have always understood time is the most valuable part of investing and is something you only get one crack at. The earlier you start, the easier it is. I would consider myself a moderately aggressive investor if I had to put a label on it. I use mutual funds as my main investment vehicle and I am heavily weighted in stock funds. I don’t shy away from small cap, mid cap or foreign investments and risk doesn’t scare me one bit. In fact, when the market crashed in 2008 my first thought was “I need to buy a lot more” and that certainly paid off. I do dabble in individual stocks every now and again, but it’s not my cup of tea. I don’t mind investing in individual stocks, I just don’t like the legwork.

Here is where my investment allocation stands as of today:

Investment Type

97.6% – Mutual Funds

1.9% – Cash (Money Market Fund)

0.5% – Individual Stock

Asset Type

82.4% – Growth Funds (Stock Funds)

15.2% – Income Funds (Bond and Balanced Funds)

1.9% – Cash (Money Market Fund)

0.5% – Individual Stock

As I said before, our returns never set the world on fire but they were good enough to get us a nice chunk of change. We beat the market some years and fell behind in others. So why change what has been working well and appears to be a fairly balanced portfolio? Well I would ask, why work so hard and have so many funds to try and beat an index when I can just buy the index? And probably at a cheaper price.

At this point in our investment life, as we move ever so close to achieving FI, we don’t need to beat the market. We just need to be the market. The market has historically returned an average inflation adjusted rate of 7%. Sounds good to me! There are always ups and downs no matter what your investment choices are. The key is to not panic in down years and don’t go crazy in up years. Even more important is to make sure you control what’s within your ability to control. Make sure you don’t get gouged by high fund fees and expenses. Make sure you live within your means and save more of your income while you have it.

My strategy and plan going forward is to pare down funds and reallocate money into low cost index funds. There is no need for me to continue on the same path that made me lose interest in the past and probably cost us some money along the way in expenses and probably returns.

What’s your investment strategy? Please leave me a comment as I am always interested in talking about investments and investing.

*Disclaimer – I am not an investment advisor, nor do I play one on TV. I don’t advocate or recommend investments to anyone. These are just my opinions and what I view as the best option for us.

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