There are books galore on investing smartly, butsafe investing today revolves around three key principles. If you follow these principles your long term investment future will also be quite profitable.
The three key principles of safe, and profitable investing are:
1. Consistency
2. Proven Analysis
3. Simplicity
These don't sound like today's stock picks, but following these three keys will tell you how to invest safely and profitably, or you could even say "how to invest smartly".
Consistency
This almost sounds silly, but successful investing requires consistency. Just like good dental practice means brushing your teeth every day, profitable investing requires a consistent method, a stick to it process that doesn't change with the blowing of the wind or even a sudden storm.
Elements of Consistency include:
- Regular time - whether you work on managing your investment portfolio once a week or daily or even once a month it should be about the same time day after day or week after week.
Without the consistency of, for example, 30 minutes every Saturday morning, opportunities will be missed or decisions rushed or even forgotten.
- Decision Factors - safe investing decisions requires using the same method each time you sit down to evaluate your portfolio and decide where to place your money.
This means sticking with one investment software program, for example, and not jumping from your program to taking advice from a magazine columnist, newsletter or TV commentator. It's simply one or the other - all the time.
Proven Analysis
There are many ways to analyze the markets or groups of stocks, ETFs or mutual funds.
The key here is to use the same types of analysis that is proven to work with the types of investments you want and for the goals you seek.
Such analysis may include:
- Relative strength momentum
- Alpha analysis
- Return analysis
- Specific charts
- Buy-sell rules
Some of these may work best for stocks while others work best for mutual funds or ETFs. Be that as it may, stick with one or two that do work best for the type of investment you are considering. If, for example your retirement account is all mutual funds, then find stick with alpha or relative strength momentum analysis.
Simplicity
Picking what stocks or funds in which to place your money doesn't have to be complicated. With the right analysis, and perhaps using a comprehensive investment software program this can be a simple process.
Choices can be made from groups of funds, ETFs or stocks that already exist. It isn't necessary to reinvest the wheel or try to figure out which stock from amongst the thousands on the markets is best today.
You can keep you choices simple by pre-selecting existing groups from which your software program then picks the best opportunities and also tells you when to sell and lock in profits.
There are dozens of such pre-existing groups including:
- 'select' funds - like Fidelity Selects
- Sector ETFs or funds
- Asset funds or Etfs
- Large Cap (big companies) stocks
- Dividend paying stocks
If you narrow your search for the best place to put your money to pre-existing groups and then use proven means of analysis coupled with tested buy-sell rules your chances of strong profits with minimal losses will become immense. Couple these principles with consistency and your will have a winning investment portfolio.
Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. An experienced business manager and journalist, he has been a registered investment advisor representative, also a professional photographer who loves escaping to the wonders of Glacier National Park in Montana.
View his software at: http://www.dynamicinvestorpro.com
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