Is there a key to successful investing?
The answer is yes, but it depends on what you mean by success, and what you mean by investment. If by successful investing you mean 20% annual returns with no risk and daily liquidity, then no, there is no key to that. If you mean a hot tip that will fund your retirement from spare change, no I don’t have that answer either.
But if you want to know how to put your assets to work to meet your needs, then yes, there is a key to that. The answer lies in the classic wisdom of the Greeks and Hebrews. In ancient Greece the first commandment was to know thyself. In investing, you need to know what your goals and objectives. If it’s to fund a retirement 25 years off, your investments will be different than if it’s to pay for a 15-year old’s expected college tuition. By knowing yourself, you understand the why of investing before getting to the what.
Classical Greece tells us to know ourselves. In ancient Israel the first commandment was to have no other gods. For investors, there should be no other goals. Stick with the plan that you’ve derived. If you’re saving for a down payment and hear about a can’t-miss stock, pass it by. It doesn’t fit your goals. If you’re saving for retirement 20 years away and are worried because the market just fell by half, don’t be scared, be greedy: the market is running a half-off sale. Wal-Mart just opened on Wall Street.
By knowing yourself and staying faithful to your goals, you’re likely to find success and not run after the false goals of hot tips or panic over market fluctuations. You might even find that volatility creates opportunity.
Douglas R. Tengdin, CFA
Chief Investment Officer
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