The Twelve Steps of Sound Investing
Even after years of frustration, if one enables persistence and good faith, you can discover an alternative approach to personal financial planning and investing.
- Realized the need for a vision of the future and defined clear long-term financial goals.
- Assembled all current financial data from savings to insurance policies and developed a comprehensive personal financial plan.
- Computed return on investments required to reach our long-term financial goals.
- Set out to understand all the parts of our financial plan and how they related to one another.
- Took the long-term investor’s view of finance and recorded our decisions regarding risk and liquidity in a complete and rational investment policy statement.
- Recognized our need for help, undertook a life-long program of financial education, and resolved to keep a watchful eye toward technical and theoretical advances in the field.
- Having understood the nature of our portfolios, allocated our assets rationally based on the best historical information and analysis at my disposal.
- Having established the percentage of assets to be invested in our selected asset classes, we carefully chose specific investments within each of those classes.
- Arranged to meet periodically with our investment advisors to review the progress toward our goals and to discuss any changes in our lives, goals, or investment policies.
- Over the long term, maintained perspective so that both gains and losses were measured in the context of our original investment and investment policy.
- Kept the faith in times of trouble, relying on our plans, our advisors’ opinion, and our discipline to avoid panic and unnecessary losses.