(This is Part III of a series on my investing background. Here is Part I and Part II. As always, be sure to complete your own research to determine the investment strategy appropriate for your particular situation.)

Top 10 Investing Fundamentals


This post will conclude the three-part series on my investing background and perspective. I’ve included this series early in the life of 60minutefinance.com to provide a broad overview of the foundation of my personal finance beliefs. Many of these topics will be discussed in more detail in future posts. I welcome the opportunity to discuss any of these ideas, so feel free to leave a comment below or contact me personally.


Here’s a summary of investing fundamentals through the years of good (and bad) financial moves, as well as from working with various coaching clients:

1.  Start saving as early as possible. There’s an old adage out there that the best time to plant a tree was 20 years ago; the second best time is today. It’s the same with saving and investing. Sure it would have been better to start decades ago, but you can’t do anything about that now, so start where you are and make the best of it.

2. Get yourself ready to invest first:

  • Understand your spending habits and make sure they line up with your goals and values
  • Eliminate (or at least have a plan to eliminate) your non-mortgage debt (debt payments are a lien on your future earnings…..getting rid of them frees up cash to invest in your future, not the banks).
  • Establish a sufficient emergency fund. It’s not an investment…..its insurance. Trust me, something will eventually go wrong and you’ll need the cash.

3. Avoid unnecessary lifestyle inflation (especially if you’re considering early retirement, but this is good for everyone). Just because your pay went up 10% doesn’t mean your spending needs to as well. Commit to saving (for example) 50% of any increase in income. A simple step like this will pay huge dividends over time! It holds down your spending (while still allowing for some increase in your standard of living) and can really boost your savings.

4. Understand yourself……success with investing is more about understanding yourself than understanding how to read a prospectus.

  • Be honest with where you are financially right now.
  • Understand the goals you’re trying to get to…..and what you value.
  • Understand your risk tolerance! I think this is the primary reason investors sell-out when the market tanks (and it will eventually!)…their portfolio was riskier than their risk tolerance.
  • Understand your NEED to take risk. Another common adage: Once you’ve won the game, quit playing. For example, my personal risk tolerance is closer to 70%/30%, but I recently reduced my risk by moving to a 60%/40% portfolio. Why? Because we’re far enough along that we can give up the marginally better return to take the risk off the table.

5. Write your Investment Policy Statement (IPS). Keep it simple, but documenting your plan will help keep you on track…..and away from impulse decisions (to buy or sell something). One of the best things I ever did when it comes to investing.

6.  Keep your costs, taxes and expenses as low as possible, while making sure you spread your investments over many asset classes.  Index funds work great for this purpose.  They are inexpensive to own, tax-efficient and offer a great way to spread your risk over many different companies.

7. Stay the course! Unless there has been a significant lifestyle change, keep with the plan detailed in your IPS. You chose it when you calm and thinking clearly……don’t throw it out because the market is TEMPORARILY acting up. Last adage: Your investment portfolio is like a bar of soap. The more you touch it the smaller it gets! Changes you make to your portfolio solely because of market turbulence will almost always come back to haunt you.

8. Re-balance your investments periodically. Over time, your 60/40 allocation can turn into a 70/30 or 50/50 allocation due to changes in the market. Periodically sell the over weighted investments and buy the under weighted. Do this at least once per year, but no more than quarterly.

9. Adequately insure risks you want to offload (ex. sufficient liability coverage, additional umbrella coverage, use LLC’s for rental properties). You don’t want to lose what you’ve worked so hard to acquire and manage.

10. Get your estate documents in order. Don’t let the courts decide who gets what…..and don’t let the IRS get any more than necessary! I’m going through this process now, so I know how daunting the task can be. But its’ well worth your time and expense.

Again, I plan to explore some of these topics more fully in future posts, but I hope you found the ideas discussed helpful. If you need help implementing these in your own life, please let me know if I can help.

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