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Strategize to Succeed - Financial Planning for Life

David Blain, CFA is CEO and Founder of BlueSky Wealth Advisors, and author of "Invest in Your Life, Not Just your Portfolio."

Get rich quick? I have some ocean-front property in Arizona...

Investing money can often seem like the pursuit of the latest, hippest, shiniest object. “Top 10 funds!” “Put your money on Bitcoin!” “Gold is where it’s at!” It seems like someone is always promising a sure-fire way to get rich quick.

But investing doesn’t work like that. Investing is not about making money – it’s about growing it. A single, overnight investment will never turn $1,000 into $100,000. Success at investing comes from strategy, planning, and preparedness. If it seems too good to be true, it probably is.

I am not saying that there shouldn’t be any risk in investing. Of course there will be! But like I learned during my days as a U.S. Army Ranger, face the world boldly, not blindly. 

If you follow my blogs, you know by now that before my clients invest a penny, we carefully map out an investment strategy based on their goals. Because if we don’t understand where they want to go long and short term, we can’t put together a successful strategy.

Five foundational investment policies

If you have 10-year-old triplets you want to put through college in 8 years, you don’t have the luxury of making a riskier investment than you do if you’re going to retire in 25 years. It just makes sense to understand what you want to accomplish with your investments. To that end, consider:

  • The purpose of the investment (Buying a house? Funding college? Retirement?)
  • How long the money will be invested (Is it needed soon or not for decades?)
  • The rate of return needed to achieve your goal (Calculate rates based on what you’ll need for a house down payment.)
  • Your risk tolerance (Don’t change your strategy based on an emotional response; be prepared for changes.)
  • Your risk capacity (Examine what’s going on in your life and determine what you can and cannot do with your investments)

Passive vs active investing

My golden rules: Do not count on Wall Street to be your friend and don’t concentrate assets in a single investment. Diversification is essential not only for your protection but for your portfolio’s strong performance. 

Active investing. The myth is that active investing is the pathway to riches. Active investing involves professional pickers and prognosticators who keep an eagle eye on the performance of individual securities, with total vigilance, and decisive actions. Don’t try to outguess the market; even the professionals can’t do it. There are too many variables at play for someone to accurately predict the direction of the markets. They are right occasionally; so is a broken clock, twice a day.

Passive investing. The fact is you want to be a passive investor – have a plan, stick to it, favor index funds, tap into the prevailing power of the market, and don’t try to outwit it. And remember the benefits of a broadly diversified strategy. 

Over long periods, stocks and bonds and different types of financial assets have provided a positive return over time. At Blue Sky, we use an Investment Worldview Approach to show clients how and why passive investment works. 



I leave you with this: Prepare using the standards we’ve discussed, including setting goals, following your plan, examining your emotions and the risk involved, and having realistic expectations for the return on your investment. Careful preparation will help you know the drill and be able to proceed with confidence. Such is the power of preparedness: come what may, you are ready. 

Copyright © 2017 BlueSky Wealth Advisors.

NAPFA-Registered, Fee-Only Financial Advisors in New Bern, NC, Pleasanton, CA and San Jose, CA.

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