Rules of thumb for investors to find success in the New Year

The New Year is just two weeks young. Investors are reassessing their approaches with a sense of revitalization. While any reflection on past results can provide helpful insights, applying the following points will yield the best results:

1. Develop or know your goals

Investing without a goal is akin to driving without a destination. Applying a goal gives your portfolio purpose and direction.

Everyone's goals vary. For example, a middle-aged investor with a small amount of capital and a decent investment knowledge will invest differently than an elderly investor with a large amount of capital and no investment knowledge.

To determine your goals consider the following questions:

  • What do you want to get out of your portfolio? Do you prefer long-term growth or short-term income?
  • How much investment knowledge do you have? Is it enough to invest for yourself or will you require the help of a professional?
  • What is the amount of capital you have? What is the maximum amount of capital you are willing to lose?
  • What is your age? How much time will you need to realistically achieve your goals?

Asking yourself these questions will get you on the right path towards setting achievable, realistic goals.

2. Develop and implement a plan to achieve your goals

Once you have determined your goals, you must apply a plan to achieve those goals.

Apply a long-term strategy for long-term goals and a short-term strategy for short-term goals. This may sound obvious, but the number of investors whose investment strategies don't align with their goals is surprising.

The Bowser Game Plan takes a long-term approach to investing by selecting smaller, growing companies. These companies often take time to appreciate. Therefore, your portfolio may take time to grow, aligning with long-term objectives. If your goal is short-term income, the Game Plan is not for you.

3. Research opportunities that fit into your strategy

Manage your time effectively by conducting due diligence on companies that will fit into your strategy. Looking at and subscribing to news sources like Yahoo! Finance, Seeking Alpha or The Bowser Report, is a good way to get introduced to opportunities.

There is a right way to research. If you prefer low-risk, low-reward opportunities for long-term, steady growth, spending the majority of your time looking at pharmaceutical penny stocks won't help achieve your goals. It will subtract time from researching opportunities that will further your objectives, which could prove detrimental to your portfolio.

With the goal of long-term moderate-risk, high-reward with low capital requirement, The Bowser Report looks into small growth and value opportunities that will provide investors with a good chance for long-term appreciation. The companies in the newsletter fit well within the Bowser Game Plan.

4. Stick to your plan no matter the market's climate

Often investors will lose track of both their goals and their plan, especially when the going gets tough. Emotions are one of the most harmful things when it comes to investing. Instituting a plan should mitigate most of the emotional decisions you make as an investor. Failing to subtract emotions is a fatal mistake that could result in an enormous loss of capital.

To make sure emotions don't take over, or that you lose sight of your goals and strategy, try to develop specific, measurable, achievable, realistic, time-bound (or SMART) goals, which will hold you more accountable than generalized goals.

In addition, set specific parameters within your strategy (i.e. buy here, sell there, this much capital allocated to this, etc.). The more specific you are, the more obvious it is when you stray, and the less likely you are to do so.

In summary, it's not too late to set your investment goals and apply an appropriate strategy. Every investor should do so immediately if you haven't already. The worst thing that you can do as an investor is invest without purpose or direction. That's often how investors lose their way (and money).

There are a lot of great sources out there on determining goals and strategies to suit your specific needs. Take the time to find out what works best for you. After all, it is your money that you are dealing with.

The onset of the New Year is a great time to step back, correct your mistakes and grow your investor self. Once you do, your portfolio will illustrate the difference.

If you have any questions about how The Bowser Report may align with your investment needs, please contact us.