Principles, Practices, & Prohibitions

For Successful Planning and Investing

1. Faith or confidence in the future of America and in free enterprise, wherever it prevails.
2. Decisiveness / Discipline. The ability to make an informed decision and follow your plan.
3. Commitment to yourself, your family, and your financial plan.

1. Allocate your portfolio strategically. If you can achieve your goals by earning a low rate of return on your investments, why incur the risk of equity investments? On the other hand, if you need to earn a higher rate of return than is available from fixed investments, allocate your investments among several different non-correlated asset classes to help manage the risk.
2. Diversify your investments. Within each asset class, diversify among many different stocks, or bonds, or whatever else you’re buying, to reduce risk.
3. Review, update, and adjust periodically. This is not to say that you should continually buy and sell investments. In fact – believe it or not – studies have shown that the more often the typical investor changes his investments, the lower the return he’s likely to earn from those investments. In many cases, quarterly reviews and annual adjustments work well.

1. Don’t try to time the market by continually switching from cash to stocks to bonds or alternative investments. Most people experience better results by employing a prudent asset allocation strategy and sticking with it.
2. Don’t react to events or emotions. Your emotions will almost always urge you to do the wrong thing at the wrong time. You’ll make better decisions if you try to invest objectively.
3. Don’t expect to outperform _____ [you fill in the blank]. There will always be some index or some investment that performs better than your portfolio over any given period of time. It would be great if your portfolio performance was always among the best, but it’s simply not realistic.