If you don’t have a good investment strategy, you will never achieve financial freedom. It is a simple logic that most people can understand. However it is not very easy as far as the implementation phase is concerned. You might have seen many people who have been fallen into debt crisis issues. You can easily be one of them if you don’t design the best investment plan which takes care of your short as well as long term needs.
Assess your current and future needs before developing a strategy
If you want to make smart investments, you need to have a good strategy. There is no one-size-fits-all solution as far as an investment strategy is concerned. Each individual has to assess his/her own situations and circumstances in a detailed way prior to designing a well thought out investment strategy. You need to look at all aspects including income, expenses, present needs and future requirements. It is always advisable to hire the expertise of an experience financial planning professional to develop the best strategy that meets your expectations.
Explore all options with care and vigilance
You must know what your choices are. When you get to know about all options available, you will find it easy to develop a comprehensive investment strategy. Some people may prefer a retirement plan at work while some others give more importance to an individual retirement account. There are also options like IRA, 529 plans for education and many more. You should make efforts to know and explore all options available.
Write down your strategy in clear and plain terms
You need to have clarity about what you are going to do. If you want clarity, you should know what you are doing. A disciplined process is what required for developing a good strategy. You have to write down everything you think about the investment. This approach helps you articulate the ideas properly. You have to keep on reassessing and analyzing the ideas and concepts that come to your mind. Your long term plans should be given the topmost priority when it comes to developing a strategy. Once you get clear idea about how to proceed, you must write down the final strategy on paper in a clear way. This approach helps you avoid taking emotional decisions while going through difficult times. Here are 5 true-and-tried ways to make investment strategies confidently:
1) Paying yourself first is a smart and effective idea
There is no need to wait for the month end to find out how much is left for making investments. You should pay yourself first. In other words, you have to focus on putting your investments first. No matter whether you want to invest automatically in a 401(k), make stock or bond investments or transferring cash from your checking account to invest in a real estate deal; you have to pay yourself first. It can always be described as a successful strategy. The most important thing is to realize the fact that your income is the best wealth generator for you.
2) Focus on effective investment diversification plans
Best investment strategies always assert the importance of diversifying the investments. If you have been investing for retirement and have several years left, you can definitely consider taking some risk. On the contrary, if want to generate funds within a few years, you must focus on reducing risk to maintain your money working in safe way. Real estate market experts advise people to opt for 40/40/20 strategy nowadays. What does in suggest? You need to invest 40% of your activity in real estate flips. Another 40% must be used for purchasing cash-flowing assets. The remaining 20% must be allocated in areas with high-risk and high-rewards.
3) Control expenses in a smart and efficient manner
Investment expenses can hurt your investment portfolio badly. It is always advisable to search for the lowest cost products that fulfill your requirements. Many people would like to follow a safe route. For them, index funds are a good option due to reduced expenses. These funds also offer exposure to a broad variety of domestic as well as international stocks and bonds. These aspects make index funds an outstanding option for several investors.
4) Keep on investing in a consistent way
You are investing because you want to achieve financial freedom. In order to achieve this objective, you have to keep on investing consistently. Many people are afraid to invest when the market is falling down. No matter whether you want to invest in stocks or real estate, the most suitable time to buy is the period where the price is falling. For example; when the market comes down, you can purchase more property with every dollar you invest. The value of the property undergoes a big difference when the market recovers after some period of time. The fact of the matter is that you have to keep on investing in a consistent way to make your investment strategy successful. Smart investors focus on long-term objectives without worrying too much about short-term fluctuations.
5) Use smart tax payment moves
As you keep on generating income from good investments, you have to end up paying taxes in increased amounts. You have to be aware of this cut and make you yourself prepared to minimize the impact of cut. One good example is to maintain real estate investments in self-directed retirement accounts. These types of account holders are taxed only when they take the cash out. That is exactly why many smart investors keep their investments in self-directed retirement accounts to lower the tax bill and allow the investments to grow.
There 5 true-and-tried ways help you make investment strategies highly successful. A systematic approach is what you need to make a good investment plan. This strategy must be followed in a disciplined manner to achieve the expected results. A good investment strategy always guarantees excellent results. You can seek the expertise of an accomplished financial planning expert to develop a systematic and well thought out investment strategy.