There are different investment styles & strategies that while different in principle or theory, they can both be equally successful. But which strategy should you choose? Which strategy is right for you?
The common denominator in all great investment advice is that the investor understands the method and has confidence in the advice. With our method you not only know what to do, but you understand why you are doing it.
Today I’m going to show you the 4 most important questions to ask yourself before you follow any TSP investment advice.
What Are Your Financial Goals?
Here’s the deal:
I’m not going to regurgitate the standard “goal setting” article/speech you’ve more than likely heard over a dozen times. Instead, I’m going to leave this as a rhetorical question and tell you my financial goals.
- Become completely debt free! (Yes that includes my mortgage)
- Accumulating enough savings to withstand an emergency.
- Amassing enough wealth in order to maintain our standard of living through retirement.
- Ensuring our parents are comfortable and taken care of in their old age.
- Helping our children once they grow older and have families of their own.
I get approached all the time for financial advice and before I give an answer I try to figure out the person’s goals, but more importantly their story. Everyone has a story and everyone’s story is unique, I’ve never found one to be the same. Perhaps similar but never the same.
Everyone has different ambitions, values, and tastes so we shouldn’t be surprised when we find that they typically tend to spill over into our finances as well.
While I feel a $60,000 car is a waste of hard earned money someone else may be a car enthusiast who understands and appreciates every feature of that vehicle.
Or vice versa
My family absolutely loves Disney World so we spend $5,000 a year on this luxury experience while someone else forgoes it all together.
I’m sorry if I’m the one to break it to you but a lot of people write and talk about personal finance but forget the “personal” aspect. There are no solid rules when it comes to finances. Instead I like to think there are guidelines that can assist you in making investment decisions.
Your financial goals should be well defined before you start utilizing any investment strategy.
Do you need to cover financial obligations now?
Before making any decision with your TSP investments you should take this question into consideration.
Because here’s the deal:
If your investments are needed to cover financial obligations right now then your TSP investment strategy is going to be quite different than the strategy geared towards a TSP portfolio that isn’t needed until years down the road.
With that being said, most individuals seeking advice regarding the Thrift Savings Plan do not need to cover financial expenses right now. Therefore their main focus should be:
- Finding the best advice regarding TSP funds
- Controlling their emotions when looking at daily price movements in the market
- Contributing monthly to their TSP portfolio
It seems very dry and simple because responsible investing is indeed that dry and simple.
Do You Think More Risk Equals More Reward?
Let’s get something straight:
You do not need to take an enormous amount of risk in order to reap considerable rewards. Quite frankly, you cannot afford to “take risk” and you cannot “afford” to lose money…EVER! Once you accept the concept of losing money you are more likely to continue losing money. It’s obvious that in the business of investing there will always be risk but never should you ever accept losses.
Every loss you take should be studied and understood more diligently than any success you have ever had. That is why this newsletter is so successful. We don’t focus on making money, we focus on keeping money. Over time if you keep enough money then you will find making money takes care of itself.
Notice how during the bear markets of 2000 and 2008 we didn’t lose a significant amount of money.
The old adage…
“Offense wins games but defense wins championships” reigns true in this case.
Are You An Active Investor Or A Passive Investor?
When it comes to investing you only have two real choices:
The first choice – You make a serious commitment in time and energy to become a good investor who turns hours of hands on research into a hefty return.
The next choice – Come to terms with the decision that diving head first into investments just isn’t for you. Then be content on achieving a possibly lower return than an active investor but realize you are putting in much less time and effort. (This is the buy and hold strategy that is pushed onto most investors)
As I mentioned earlier the notion of “risk = reward” is absolutely absurd. The truth is “Work = Return.”
But what if you could find the sweet spot in between those two choices?
What if you could dedicate 15 minutes of your time a month towards your TSP Portfolio which resulted in extraordinary gains versus the conventional buy and hold strategy?
Our newsletter aims at providing a quick and detailed report for you to review every month to ensure your TSP investments are protected and growing. We do all the heavy lifting during the month so all you have to do is read.
What Is The Difference Between An Investor & A Speculator?
The answer is very simple if you keep the following concept in mind:
Speculators base their decisions off of emotions while believing risk taking equates to more gains. Often times they have no system or strategy in place but believe their potential gains will make up for their lack of preparation.
An investor on the other hand understands the essentials for long-term success. The strategy is simple but involves developing an investment discipline that most investors severely lack, especially in the age of so much information at our fingertips. In today’s world it is more difficult to sit still than it is to do anything else. Marketing gurus have investors believing they need to consume every single bit of information in regards to the stock market in order to make a profitable decision.
I’m here to tell you that’s not true at all.
Instead of keeping your eyes glued to the computer screen everyday staring at TSP share prices and consuming hundreds of financial reports, you should focus on understanding how to identify bullish and bearish markets. By doing this you can avoid major downturns in the market that have cut portfolios in half while enjoying bull markets that increase your portfolio by 100-300%.
We have the data and research to prove that this method not only works but is far more profitable than the conventional buy and hold method.