A good investment strategy to earn money by investing

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Whether the year is 2011, 2012 or 2020 – here is a good investment strategy for making money investing without a crystal ball. Any good investment plan considers both investment selection and timing. If you can’t make money investing with this simple strategy, rest assured that only a few and the lucky ones will make money.

Before you stress out about crafting a good investment strategy for 2011 and beyond, 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, equity funds and real estate equity funds. In the final analysis, if these three areas of investing fall apart, we are likely in a depression and only a lucky few or smart speculators will make money investing.

A good investment strategy does not rely on speculation or trying to time the markets. No matter what you hear, no one has a proven, consistent record of market timing beating the markets significantly over the long haul. If they did, they would make a ton of money investing, and they would be hiding their secrets instead of sharing them. So why not settle for a good investment strategy that relies on just one major assumption: that the United States 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 money market funds. At today’s interest rates, these might not seem like a good investment, but they are safe and earn interest that keeps up with today’s rates. Specifically, by owning just 4 different funds, you can build a sound investment strategy for 2011 and beyond and earn money investing in America’s future. To move from high safety to higher risk and greater profit potential: a money market fund, mid-term bonds, large-cap equity income securities and equity real estate funds is everything you need.

A good investment strategy to get your feet wet is to simply invest an equal amount in all 4 funds. The timing strategy requires no judgment or guesswork. A year later and once a year after that, you simply move money around so that all 4 funds have the same value again. This automatically forces you to take money off the table from your best performing funds – and move more money into those that haven’t performed as well. The net result over time is that you buy more stocks when prices are low, sell stocks that are relatively expensive.

It is also a good way to earn money by investing for the long term while controlling risk. 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 they were hit by the financial crisis. If you had owned them and kept them, by 2009 you could have had a significant amount of money accumulating and at risk there…resulting in big losses as a result of the financial crisis.

There’s more to what I call a good investment strategy for 2011 and beyond than simplicity. This strategy uses two of the only proven tools in the investment industry: BALANCE & REBALANCE and DOLLAR COST AVERAGING. The first tool helps you stay on track while controlling risk, and the second is the tool that helps reduce your average cost of investing by allowing you to buy more shares when prices are low and less when high.

You can combine a good investment strategy with moderate risk by owning just 4 different mutual funds. People make money by investing for the long term with bonds, stocks, and real estate; and the smart ones keep money in a safe investment as well as for more flexibility. In years past, some people just got lucky and made money investing without a strategy. With a good investment strategy, you won’t need to cross your fingers and rely on luck. If America thrives in 2011 and beyond, so should you.



Source by James Leitz

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