Investing Rules Regardless of Investing Model

Tower Bridge

There are a few basic investing principles that apply regardless of what investing model is used to manage the portfolio.

1. Save early.
   • Take advantage of the power of compounding and get dollars working as early as possible.
   • Don’t feel you need a large sum of money to get started.
2. Keep costs to a minimum.
   • Morningstar points out that over the long run, mutual funds with low expense ratios perform best.
   • Reduce trading costs by limiting trading and/or using commission free ETFs.
3. Develop an investment plan and stick with it.
   • Remove emotional investing as much as possible.
   • Strategic Asset Allocation is a model or plan used with the Schrodinger, Copernicus, and Pasteur portfolios.  Check those out on this blog.
   • The Rutherford portfolio as well as several other ITA portfolios use a momentum model.  Investigate the momentum model.
   • Stick with the plan you feel fits your risk aversion needs.
4. Expect market volatility and profit from it.
   • Use the momentum model to reduce risk to the downside by using SHY as the cutoff ETF.

While there are additional principles, concentrate on the first three and then continue to educate yourself.  One way is to follow this blog on a regular basis.