Helping Yourself Build a Winning Strategy for Your Portfolio

The key to winning financially is having a strategy that gets you where you want to go. The destination is your choice and yours alone. In developing the goal or destination of choice you now put the ‘why’ into your portfolio and trading. The challenge as an investor is not forgetting why you are investing. Making money in trading is great, but why are you doing this to start with? Building a winning strategy starts first and foremost with a plan. The plan starts with what do you want – the why factor. Why do you want to make money? Retire? Travel? Gifting? The why is your choice, but more important it is your motivation.

This leads to position building your portfolio. Every position you take in your portfolio is designed towards the why. If you are accumulating for retirement over the next 10 years and need a 10% return – stay focused on the why and the 10% will be the guide to building positions. It puts perspective around your trading. For example, I have a daughter currently in college who has money to pay for education in a portfolio that started 20 years ago. The money deposited was $10,000 at birth to pay the cost of her education. The goal was to accumulate $80,000 by the time she entered college. Thus, I set a return objective of 12% per year to accomplish that goal. As you know over the span of 18 years you will have good years and you will have bad years in the market. So, with my goal or better yet, my ‘why’ understood, I set out to invest the money over the years to accomplish that goal nothing more – nothing less. This allowed me year over year to manage the risk of each position in the portfolio to accomplish the goal. This process keeps me from looking at how the market performed or other people. My focus is my goal. It’s Your Money – Manage IT!

Over the years I have learned how important the why factor is to the success of my investing. As you know every day I scan the market looking for opportunities. When I find what I like relative to my strategies and objectives I place them on a watch list. As the strategy reaches a point of putting them into play I determine how to enter, exit and set a target for the play. This permits me the discipline necessary to put my strategy into play. All of this is determined and motivated by my goal. Getting what you want financially isn’t really difficult, managing you is and that can be the difference in achieving your goal.

Watch for more from Jims Notes for the next 4 more ingredients for “Building a Winning Strategy for YOUR Portfolio” in the following posts:

  • Market Declines are Opportunities
  • Focus on the Positive
  • Holding Long Term Positions is Okay
  • If You Don’t Want to Manage Your Investments Yourself – Then What?