Whether it is 2011, 2012 or 2020, here is a good investment strategy to make money by investing without a crystal ball. Any good investment plan takes into account both the selection and the timing of the investment. If you cannot make money investing with this simple strategy, rest assured that only a few and the lucky ones will make money.
Before insisting on developing a good investment strategy for 2011 and the future, ask yourself the obvious question. Where do the most successful people invest (or where have they already invested) 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 all three of these areas of investing collapse – we are probably in a depression and only a lucky few or smart speculators will make any money investing.
A good investment strategy is not based on speculation or on the synchronization of the markets. No matter what you hear, no one has a proven, consistent track record of market timing that beats the markets significantly over the long haul. If they did, they would make a lot of money investing, and they would hide their secrets, not share them. So why not settle for a good investment strategy that makes only one major assumption: that the United States will grow and prosper over the long term?
Investing money in the three areas above is easy 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, it may not seem like a good investment, but they are safe and earn interest that follows current rates. To be more specific, by owning only 4 different funds, you can put together a good investment strategy for 2011 and beyond and make money investing in America’s future. To go from high security to higher risk and greater profit potential: a money market fund, medium term bonds, large cap income stocks, and real estate equity funds is all that is needed. you must own.
A good investment strategy to get your feet wet is to simply invest the same amount in all 4 funds. The timing strategy does not require any judgment calls or guesswork. A year later and once a year after that, you simply move money so that all 4 funds have the same value again. This automatically forces you to take money off the table from your top performing funds – and move more money to the ones that haven’t done as well. The net result over time is that you buy more stocks when the prices are going down and you sell relatively expensive stocks.
It is also a good way to earn money by investing for the long term while limiting the risks. Simply buying and holding funds is not a good investment strategy and has already caused problems for many average investors. For example, real estate funds were good investments for several years until they were nailed down by the financial crisis. If you had owned them and just kept them, in 2009 you could have accumulated a large and endangered amount of money there … resulting in big losses as a result of the financial crisis.
It’s not just simplicity in what I call a good investment strategy for 2011 and beyond. This strategy uses two of the only proven tools in the investment industry: BALANCE & REBALANCE and DOLLAR COST AVERAGING. The first tool keeps you on track while controlling risk, and the second is the tool that helps lower your average cost of investment by making you buy more stocks when prices are low and less when prices are low. ‘they are high.
You can set up a good investment strategy with moderate risk by owning only 4 different mutual funds. People make money by investing for the long term with bonds, stocks and real estate; and the smartest keep money in a safe investment for more flexibility. In the past years, some people have just gotten lucky and made money by 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.