Stock trading strategy: If you want to beat the market over the long run, you need a solid investment plan

Julie Brownlee, Fsp Invest, 24 Jul. 2014

Tags: investment plan, stock trading strategy, investment strategy, how to beat the market, long-term investing, investing



When it comes to investing, you need a solid investment plan. Without a plan, you greatly reduce your chances of success.

So when it comes to putting your investment plan together, what do you need to include? A good investment plan need to start with solid foundations.

Read on to find out what these are…



Investment plan foundation #1: Have realistic goals


You don’t know what lies ahead on the markets or for the economy. So you need to ignore these factors when putting your investment plan together, Alexander Green in Investment U explains.

You need to focus on wealth creation through investing.


Investment plan foundation #2: Use asset allocation


Apply asset allocation to your investment portfolio. Don’t just invest in different assets randomly. Good asset allocation helps to lower your risk and boost your returns.


Investment plan foundation #3: Apply strict rules when you invest


Ensure you do your research and know all the crucial information inside out. You need to look at things like company sales, earnings, operating margins and debt levels.


Investment plan foundation #4: Know when to sell BEFORE you buy


You should know when you plan to sell a share or other asset before you buy it. For example, with shares, use a trailing stop loss to protect yourself from the downside.

If you use asset allocation, this will also be a reason for selling some of your investments.


Investment plan foundation #5: Minimise your costs and taxes


Find stockbrokers that charge reasonable rates and a good service. And use losses to help offset gains to minimise the tax you pay.

By sticking to an investment plan, you’re in a much better position to maximise your returns over the long-term.

So there you have it, why you need a solid investment plan if you want to beat the market over the long run.

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