What is the Best Investment Strategy?

At first glance the best investment strategy inbecause you have no crystal ball. It also means
late 2007 was to sell every stock investment youthat you have a real good chance of avoiding big
held; and the best strategy in early 2009 was tolosses that can upset your future financial plans
put 100% of your investment portfolio into(like a secure retirement) as well.
stocks. The result would have been noEvery good investment strategy focuses on
investment losses in 2008 and big profits in 2009asset allocation. This means that you allocate your
and early 2010. Your odds of doing this without amoney by diversifying and spreading it across all
crystal ball were about zero. But with a simple andfour, or at least three of the asset classes.
sound investment strategy you can make theStarting with the safest these are: cash
best of any market situation.equivalents, bonds, stocks, and perhaps other
The best investment strategy is not a formulainvestments called alternative investments (like
that tells you when to dump one investmentreal estate, foreign or international securities, and
asset and when to buy and hold another on agold). The simplest and best way for you to do
short term basis. Trying to time the markets isthis is through mutual funds that invest in each of
speculation and beyond the scope of sensiblethese areas: money market, bond, stock, and
investing for the average investor. What youspecialty funds, respectively.
need is a longer-term sound plan that onlyFor example, if you want relatively low risk and
requires minor adjustments over time. Let's looksimplicity you might allocate 1/3 each to a money
at the key elements to putting together yourmarket fund, a bond fund, and a stock fund. At
best investment strategy for long term profitsthe beginning of each year you review your
with less risk.investment portfolio to make sure your asset
You must take risk into consideration whenallocation is on track. If, for example, your stock
judging the results of, or putting together anyinvestment has grown from 33% to 40% of
investment strategy. Our crystal ball scenarioyour to total investment value, move money
went from an asset allocation of zero for stockfrom your stock fund to the other two to make
investment to 100%. Not only is this strategythem all equal again. By doing this you are taking
very risky, it is also short-sighted. It begs themoney off the table from your riskier stock
question: what do you do in 2010 and beyond?investment when the market gets pricey, and
When do you cut your stock investment and run,adding money to stocks when prices are lower. In
and where do you go next? Overstay yourthis way you have lower risk, no need for a
welcome and your stock investment profits couldcrystal ball, and you know exactly what you are
evaporate in a few months, because the truth ofgoing to do each and every new year.
the matter is that you have no long termIf you feel the need to keep it simple, do so as in
investment strategy at all.our example above. If you want to take the best
As an average investor, taking risk without a planinvestment strategy to the next level include
is not the way to play the investment game. It'sinternational stock funds and specialty equity
your money and it's important to you. Viewfunds like real estate and gold funds. The added
putting together your best investment strategyadvantage here is that in the past these
like this: you want to earn in the neighborhood ofalternative investments have proven to have the
10% a year over the long term taking only apotential to offset losses when stock prices in
moderate amount of risk. This means that yougeneral are falling. In short, they offer even more
will likely never make 50% or more in a yeardiversification to your asset allocation.