The Investment Plan

As part of my series, Eight Rules for Life, here’s my Investment Plan. 

Most people who are inclined to invest on their own tend to have reasons why they’re investing but not reasons for selling. My approach is pretty simple, at least to explain. The reasons you invest should be the reasons you sell. Here’s how it works.  

I believe that you should have a minimum of three concrete reasons for entering an investment. For example, my three reasons for stock-based investing are: 

  • Does the company have more cash than debt? 
  • Is the company growing revenue year over year? 
  • Is the company paying a dividend that’s stable or growing? 

That also provides a road map to exit the investment. If two of those three changes for the negative, I sell. It takes all emotion out of the process and provides specific guidance for sound investing and selling. 

Photo by: Getty Images

 

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