Choosing Investments That Reflect Your Goals, Not Somebody Else’s

Communicate your goals clearly, and stay focused on a simple game plan

Photo by Windows on Unsplash

Here’s a mistake a lot of investors make:

Trying to make “the most money possible” with their investments.

That is not a real plan.

A more rational investment plan is “taking the least amount of risk required to meet my goals.”

The more ambitious your goals, the more aggressive your investments are likely to be, but there’s no reason to jeopardize a plan by taking on more risk than what is required — or that you can handle.

Once you create a portfolio that maximizes your odds of achieving your goals, the most important thing you can do is also the hardest:

Do nothing.

Every time you tinker with your portfolio, you create ‘behavioral risk’ — the risk that you make the wrong decision that costs you money.

Let’s say you started out with a boring but effective portfolio of a mix of stocks and bonds.

This portfolio was designed to help you hit your retirement savings goals — but a few years into the plan, you get bored and sell that boring portfolio and invest in some hot new investment…