Of Dollars and Data: The Sustainable Path is the Only Path

Investing and building wealth can be similar to dieting. Most don’t follow a set plan. When they try to do so, they may be able to for a while. But at some point, old habits kick in.

As investors, building a system to regularly add to an investment program is crucial. And those who don’t have an investment plan may not invest at all. If they do, their results will likely prove poor.

That’s why most financial experts suggest setting up an automatic plan, often involving an employer’s 401(k) plan. Doing so means putting in a set amount of money each paycheck. And it’s often invested in a basket of stocks.

That avoids the danger of picking individual stocks at random. And investing inconsistent amounts of money at different times.

A set program also helps remove emotions from investing. Rather than panic during a selloff and move to cash, an investor’s regular contribution will simply buy more stocks than before. Such a program can be tweaked to buy shares of individual companies when they go on sale, with the understanding that there will be more volatility involved.

The goal is to find a sustainable strategy that can continue under any market condition. By sticking to a strategy, investors avoid going all-in on stocks at a market top. And they avoid hiding in cash when the market finally turns around.

To look into more detail about creating a sustainable investment strategy, click here.