If you’ve ever waded into the sea of investment opportunities, you’ve probably found that there are as many different investment strategies out there as there are financial professionals selling investments. So how do you develop — and implement — a strategy that’s right for you?

The first thing to remember is that while there are numerous investment strategies to be found and, possibly, tried, there are only three real investment objectives: safety, growth, and income.

If your primary objective is safety, the investments you choose should, not surprisingly, put your principal at little or no risk of loss. Investments such as bank CDs, fixed annuities, US

Government bonds, and the money market offer fairly safe havens for investors in this category.

If your objective is long-term growth, you should seek out investments that appreciate in value over time. Stocks, some types of mutual funds, and variable annuities are good examples of growth-oriented investments. But take caution: investments offering long-term growth generally come with some degree of risk and, as a rule, where there is potential for growth, there is also potential for loss.

The third investment category — income — offers you just what its name implies: income in

the form of regular payments — usually from dividends — over an extended period of time. You are probably retired or about to be retired if your investments are generating income.

Chances are probably better than fair that throughout you life, your investment objectives will always fall into one- or perhaps two — of these three categories. For example, let’s say you’ve reached retirement age and you now want to use your investments to supplement Social Security and/or any pension money you may have. In such a case, you’ll probably want to start shifting your investment portfolio away from growth oriented investments — certainly away from any investments that put your money at risk — and toward those offering

both safety and current income.

On the other hand, if you’r e still several years away from retirement, or if you feel you’ll have sufficient assets to see you through your retirement years, you may be more interested in maintaining a portfolio offeri ng the potential for continued growth. You may even be willing to take a bit of risk in order to achieve a more aggressive return .

Successful Investing

There are three essential keys to successful investing. The first is to make sure the investments in your portfolio match your investment objectives. This isn’t always as easy as it sounds.

Take mutual funds for example: while you choose the funds or fund families in which to invest your money, it’s the fund managers who decide which stocks, bonds or money market instruments to buy. Thus, it ‘s important to select investments from an individual or company you trust.

A second and vitally important key to successful investing is to develop a sound investment strategy and stick with it. To do this you must first define your long-term goals. Where do you want to be in 5, 10, 20, or even 30 years? Next you must know your time horizon. How much time does your money have to grow before you will begin thinking about preserving it? Step three is to know your risk tolerance. Are you willing to ride out fluctuations in the value of your investments in order to achieve higher long-term goals or do you need to see regular and steady growth? And finally, diversify. Spread your investments out over several classes of financial vehicles to protect against the normal fluctuations in each class.

The third key to successful investing is to keep track of your portfolio. Are your investments meeting your objectives? If you’ve assembled a conservative portfolio, is it preserving your capital? If you’ve chosen to be aggressive, are you seeing the kind of growth you’d like?

For some investors, answering these questions — or more accurately, not having answers to them — is what keeps them out of the investment arena. Many, especially busy professionals and business owners, simply don’t have the time to pour over prospectuses, meet with financial planners, and keep an eye on their investments. As a result, many have assembled their portfolios without the help and advice of a financial professional and thus, without any overall strategy. Too often the result is a collage of stocks, bonds, mutual funds and annuities that may not meet their needs as well as it could or should.

Others avoid investing altogether and simply place their investment capital into the most convenient and secure financial instrument they can find. As often as not, that turns out to be bank certificates of deposit. When their CDs mature, these investors simply reinvest their principal and the resulting income in more certificates of deposit .

What these investors — and you if you’re among this group — really need is an investment strategy designed to help you identify and meet your investment objectives. Unfortunately, what you may very well have is a portfolio that ultimately, will not and cannot get you where you want to be.

What does your investment portfolio look like? What are your investment objectives? Are you using income-oriented investments to try and generate growth? Are you maintaining enough growth to outpace inflation? Is your principal safe or is it at risk?

H you’re unsure of the answers to these questions, or if you’ve simply been too busy to take the time to find the answers, do yourself a favor: make the time. Carefully consider your investment goals. Find an investment professional you trust. And create a plan that will help

you achieve your goals. It’s never too late to begin accumulating wealth. All it requires is an awareness of your current situation, an investment strategy to help you get where you want to be, and a commitment to seeing that strategy through. We would be happy to help you develop that strategy.

Written by: Jerry Guttman

Jerry Guttman wrote a book titled Personal Finance and Estate Planning for a Better Quality of Life.