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Principle #9: Follow a Planned Investment Strategy

How you implement your asset mix and construct your investment portfolio is as important as determining the proper asset mix, and proper implementation will greatly impact your overall performance.

There are a number of different investment strategies that, if followed deliberately and consistently, are likely to produce a reasonable rate of return with a reasonable degree of risk. The most common reason that investors fail to reach their objectives, or become dissatisfied with portfolio performance, is the lack of a plan or an overall investment strategy. The investment strategy should be explained in the Investment Policy Statement.
No one would start to build a house without a plan and it is equally important to have a plan to build financial security. A strategy helps you avoid the 'fear and greed' response.

Professional money managers will always have a written, well-articulated and disciplined investment strategy. Few individual investors have any disciplined investment strategy.
Some investment strategies or styles that can work well if followed with discipline include:

• Growth Investing
  
• Value Investing
  
• Small Cap Investing
  
• Tactical Asset Allocation
  
• Sector rotation
  
• Momentum

Strategies that rarely work include:

• Buy everything a salesman recommends
  
• Buy all the new issues
  
• Buy last year's hottest mutual fund
  
• Do what everyone else is doing
  
• Go where your emotions lead you

The key to reaching your financial goals is the investment process, not the individual investment products.