5 Principles of Successful Investing

On this episode of A Wiser Retirement™ Podcast, Casey Smith and Brad Lyons, CFP® discuss 5 principles of successful investing. These principles should help you succeed in any season of life and through differing economic and political circumstances.

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As we approach another election cycle, it is important to remind ourselves of 5 principles of successful investing. It can be easy to get caught up in political party agendas and let that affect our investment strategies. As both parties are now voting to determine who their presidential candidate will be, we are already looking at statistics to try to understand who has a better chance of winning the 2024 election, considering the country’s economic and social situation at the moment. 

There is a very interesting podcast interview by the All in Podcast, with Robert Kennedy Jr., where he touches on historical facts about elections. As elections start making headlines with more frequency over the next few months, we like to remind our clients that there will always be things outside of our control, and this is one of them. We have to focus on what we do have control over, and make the best out of our circumstances. With this in mind, here are 5 principles of successful investing.

1. Set Investment Goals

Just throwing money into something with the sole purpose of making more money is much like going through life aimlessly. You should always ask yourself what you want the money to do for you, and then we figure out how to invest and what to invest in. Therefore, once you have clear goals set, then you can start developing a plan to reach them. 

2. Understand Your Risk Tolerance

A risk tolerance questionnaire can help you determine what your risk tolerance level is. This is an important conversation to have with your financial advisor, so they know exactly where you stand. It is also important to understand the magnitude of the stock market oscillations, which can be for gain or loss. The higher the yield, the bigger the risk. This is really a personal decision, as some can understand the stock market variations better than others. Historically, we know that the stock market has always gone up after a bad period.

The role of an advisor is to guide people through the bad times and help them stay invested for the long-term and be able to reap the benefits of their investments. Vanguard published a report a while back that stated that having an advisor is beneficial to a portfolio by 3%. In other words, people who use a financial advisor with their investments have 3% more return than others who choose to “DIY“.

3. Diversify Your Portfolio

Diversifying your portfolio, doesn’t mean diversifying who holds your money. Ultimately, diversification means your portfolio should include a variety of investments such as large cap stocks, big cap, small cap, foreign stocks, and bonds (inside bonds there are different maturity periods).

4. Invest for the Long-Term

As a firm, we’ve seen the ups and downs of the stock market and have been able to note that chaotic times don’t have a permanent effect on investments, it’s always a temporary effect. Losses occur based on how investors react to the rough times, and not really the specific time period. We’ve seen some really tough times for the financial sector in our country. However bad those were, when we look at the charts now, we see that they are nothing but a blip. After the difficult times we have always been able to recover and do even better than before.

Unfortunately, the problem with investing in the stock market is created by human nature. It is in our nature to think that whatever we are going through today will remain forever. This is not true for most aspects of life, especially including investing.

5. Rebalance Your Portfolio Regularly

This step is difficult for “DIY” investors, because it’d require a lot of excel knowledge and time to spend on it. Rebalancing means selling high and buying low. This goes back to diversification and risk tolerance. It’s crucial to understand what you are doing to make sure this process is profitable to your portfolio.

Download our eBook on “Buyer Beware: Why do they keep trying to sell you that annuity?”


0:00 Intro

14:20 Set Investment Goals

19:56 Understand Your Risk Tolerance

24:35 Diversify Your Portfolio

30:38 Invest for the Long-Term

39:00 Rebalance Your Portfolio Regularly


Learn more about Casey Smith and Brad Lyons, CFP®


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