Whether it is the year 2011, 2012 or 2020, this is a good investment strategy to make money investing without a crystal ball. Any good investment plan considers both the selection and the timing of the investment. If you can’t make any money investing with this simple strategy, rest assured that only the lucky few will make any money.
Before you stress about putting together a good investment strategy for 2011 and moving on, ask yourself the obvious question. Where do the most successful people invest (or where have they in the past) to make money by investing for the long term? The answer before the financial crisis was bonds, stocks and real estate. The answer today for the average investor is the same and takes the simple form of bond funds, stock funds, and real estate equity funds. In the final analysis, if these three investment areas plateau, we are likely in a slump and only a few lucky people or smart speculators will make money investing.
A good investment strategy is not based on speculation or trying to time the markets. No matter what you hear, no one has a proven and consistent track record of market timing that significantly outperforms the markets over the long term. If they did, they would make a lot of money investing and they would hide their secrets, they would not share them. So why not settle for a good investment strategy that makes just one core assumption: that the US will grow and prosper over the long term?
Investing money in the above three areas is simple with mutual funds. To reduce your risk and add flexibility to your investment strategy, add a fourth type of fund called a money market fund. At today’s interest rates, they may not seem like a good investment, but they are safe and earn interest at current rates. To be more specific, by owning just 4 different funds, you can put together a good investment strategy for 2011 and beyond and make money investing in America’s future. In order from high security to higher risk and higher profit potential: a money market, a medium-term bond, a large-cap equity income, and a real estate equity fund is all you need to own.
A good investment strategy to get your feet wet is to simply invest the same amount of money in all 4 funds. The time strategy requires no judgment or guesswork. A year later and once a year after that, simply move the money around so that all 4 funds are back to the same value. This automatically forces you to take some money out of your best-performing funds and move more money to those that didn’t do as well. The net result over time is that you’re buying more stocks when prices are low, you’re selling stocks that are relatively expensive.
This is also a good way to make money by investing for the long term while keeping risk under control. Simply buying and holding funds is not a good investment strategy, and has caused problems for many average investors in the past. For example, real estate funds were good investments for several years until the financial crisis brought them down. Had he owned and held onto them, by 2009 he could have accumulated a significant amount of money and be at risk there…resulting in huge losses as a result of the financial crisis.
There is more than simplicity involved in what I call a good investment strategy for 2011 and beyond. This strategy employs two of the only time-tested tools in the investment business: BALANCE & REBALANCE and DOLLAR COST AVERAGING. The first tool keeps you on track while controlling risk, and the second is the tool that works to lower your average investment cost by making you buy more shares when prices are lower and fewer when they are high.
You can put together a good investment strategy with only moderate risk by owning just 4 different mutual funds. People make money by investing for the long term in bonds, stocks, and real estate; and the smart ones save some money on a safe investment also for flexibility. In years past, some people just got lucky and made money investing without a strategy. With a good investment strategy you will not need to cross your fingers and rely on luck. If America thrives in 2011 and beyond, so should you.