Introduction: Investing Without a Map
Imagine setting out on a road trip without a map, GPS, or even a clear destination. Chances are, you’d waste time, gas, and energy—and might not end up anywhere worth going. That’s what investing without a strategy looks like. Too often, investors rely on gut feelings, news headlines, or the latest hot tip to pick stocks. The results? For a 20-year span ending in 2015, the S&P 500 averaged around 8.2% annual return, while the average investor realized only around 2.1% annually. Source: Crews Bank & Trust
The good news: You don’t need to be a Wall Street expert to invest with confidence and earn professional returns. What you do need is a clear, repeatable strategy that helps you make decisions with discipline and purpose.
Why a Strategy Matters
- Consistency beats emotion. Markets are noisy. A strategy helps cut through the headlines and keeps you from chasing fads or making rash decisions.
- Better decision-making. A framework helps you evaluate opportunities objectively—whether that’s choosing stocks, ETFs, or deciding when to buy and sell.
- Confidence through clarity. With a strategy, you know why you’re making each move. That confidence compounds over time, just like your investments.
- Measure what matters. Having a plan allows you to benchmark your performance against clear goals or indexes (like the S&P 500)—so you know if your portfolio is really succeeding long term.
What Makes a Good Investment Strategy?
A good strategy doesn’t have to be complicated. In fact, simple often works best. Here are a few core elements:
- Clear Goals. Are you investing for retirement, a down payment, or building wealth long-term?
- Rules for Buying. For example: only invest in businesses you understand (like Peter Lynch does), or only buy when valuations meet your criteria.
- Accountable Finance tip: Find strategy ideas by browsing top investing strategies from the pros, or create your own with AI
- Rules for Selling. Set conditions for trimming or exiting positions so you don’t let emotions drive decisions. Often an investing strategy has recommended buying and selling periods.
- Diversification. Spread risk across industries, geographies, or asset classes.
- Benchmarks. Choose a yardstick (like the S&P 500) to measure whether your strategy is working. At a minimum you want your investments to perform as well as the market average, ideally better.
- Accountable Finance tip: Connect with Plaid to track your portfolio performance and benchmark to the S&P.
How to Build an Investing Strategy That Works for You
- Start with your goals. Write them down—be specific. “Retire at 60 with $1M” is better than “build wealth.”
- Choose your style. Do you want to be hands-on (an active investor) or mostly hands-off (like the average investor)? Either way, there's a strategy that fits your time.
- Pick a framework. You can borrow proven investing strategies from the greats (Warren Buffett, Peter Lynch, James O'Shaughnessy) or create your own investing rules.
- Test and track. Backtest your strategy to simulate portfolio performance. Modify any strategies that underperform compared to the S&P 500. Use benchmarks to compare how your strategy performs over time.
- Refine, don’t reinvent. Stick with your chosen investing strategy, but make thoughtful tweaks as your goals or circumstances change.
The Bottom Line
Every investor—whether you check your portfolio daily or twice a year—benefits from having a proven investing strategy. It saves time, builds confidence, and improves outcomes. And the best part? Strategies don’t just make you a smarter investor; they make investing less stressful and more rewarding.
With the right tools, you can stop guessing and start investing with purpose.
