Kevin’s 8 Rules For Investing

Kevin Garrett |

On a regular basis, I get requests from people to summarize our investment advice. We are in a complicated, nuanced business and its difficult to boil down my views to just a few relevant thought bites. However, here are a few thoughts that are worth remembering when thinking through and evaluating your investment philosophy and strategy. 1. Take the Big Picture Approach: Use a spreadsheet to track your total net worth — and don't focus on day-to-day price fluctuations. 2. Hope for the best, but plan for the worst: When wanting to manage downside risk and reduce potential volatility in your investments, focus on diversification. Learning and understanding some market history is also helpful. Count on your investments to do poorly from time to time. Don’t freak out when your investments happens and panic leads to irrational actions. 3. Investigate and then invest: Make sure you do your research! Study companies’ financial statement and mutual funds’ prospectus. Just make sure your diversified and own good quality companies. 4. Never say always: Never put more than 20% of your net worth into any one investment. 5. Know what you don’t know: Don’t fall into a trap of thinking you know everything. Evaluate the investments in different time periods or market cycles and try to understand how the investment might be impacted by market forces. 6. If it sounds too good to be true, it probably is: Remember this formula: High Return + Low Risk + Short Time = Fraud. 7. Costs are killers: Pay attention to costs can equal 1%; Mutual fund fees are another 1-2%; If middlemen take 3-5% of your cash, its pretty obvious that your returns will suffer. 8. Eggs are easily broken: Did I mention diversify? Never put all your eggs in one basket; diversify across U.S., Foreign stocks, bonds and cash. Regardless of how much you believe in your company, never fill your 401(k) with employee company stock...Remember Enron? As I say regularly, everyone's situation is unique and thus the answer for YOU cannot be adequately addressed in a handful of thoughts. If you'd like to review your particular situation, we offer a generous "Second Opinion" program, where we review your goals and your current strategies and we stress test those assumptions to ensure that your on track to meet your goals. If you aren't, we'll even provide you some suggestions on how to address where your plan is failing. Feel free to reach out to me here, or visit our website at to arrange a free consultation.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. 

Investing in mutual funds involves risk, including possible loss of principal.  

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.