When some people hear the word “strategy,” they think of it in terms of war, politics, business, or even the game of chess. But the definition of “strategy” is simply a specific approach to solving a problem, or a plan of action for how you will achieve a certain goal. In that case, a strategy can be applied to nearly any aspect of life—including finance.

A wise investor will define a clear strategy to guide their investing decisions. Without clear direction, the number of choices can be overwhelming and lead to confusion and frustration.  Therefore, the hallmark of an effective strategy is clarity. So, how do you choose an investment strategy that helps you pursue your financial goals? This article provides some key factors to consider.

Values: The Guiding Star of Strategy

Any strategy you choose must be based on a foundation of who you are and what you believe— your value system. When working with a new client, my six-step process always begins by asking clients about their values. These typically do not change over time, although we tend to understand them more clearly as we mature. My goal is to understand where each client is in their lives currently and where they want to go. I ask questions not only about their financial picture, but about their goals, dreams, fears, and motivations. All this information is imperative to understand before I can construct a portfolio for the client.

Active vs. Passive Approaches to Investing

A separate consideration that bears equal importance: how much involvement do you want in the management of your portfolio? There is no right or wrong answer here. Think about whether you enjoy the idea of researching and learning about different investment vehicles such as stocks, bonds, and other types of securities. Do you see yourself as the type of investor who likes being in control and seeing a complete picture?

If financials are not your cup of tea, you might prefer a more passive investment strategy, which requires less frequent maintenance. The drawback with passive investing is that you are value indifferent, meaning you don’t care if companies are over or undervalued. Also, many investors are not benchmark sensitive. They are more interested in preserving capital than growing it, or losing it, depending on what the market averages do.

Risk Type and Tolerance

Risk is inherent to investing, and every strategy carries a different type of risk. With passive investing, you are risk agnostic, in that you only want to follow what the market averages do in both good and bad times. A key factor to consider is the time horizon for withdrawal. The investor who plans to work for the next 30 years can withstand a greater degree of volatility in the short term in exchange for the possibility of higher long-term rewards. Someone five years away from retirement will more likely accept modest gains in exchange for stability.

I strongly believe that each investor/client is unique and has unique risk tolerances, goals, needs for money, unique time frame outlooks, etc. Passive investing does not lend itself to differentiation and client uniqueness. The right asset allocation for a professional couple in their 40s who are adding to their accounts continually is completely different from a person in their 80s or 90s who needs income and wants, at all costs, to preserve what they have to live on and pass on to heirs. This is why it is imperative to consider your personal situation and risk tolerance prior to implementing an investing strategy.

Choosing the Right Strategy

Investment strategies are as unique as fingerprints, and many factors can influence the available options when building a financial plan. So how do you choose the best strategy for you and your family? By accepting and focusing on your unique circumstances, risk tolerances, goals, income needs, etc. Devising a successful investment strategy requires much thought and careful consideration as well as time and planning. Partnering with a trusted, experienced financial professional is one of the best first decisions you can make when starting on this journey.

If you are curious to see what a financial strategy might look like for you and your family, I am here to help. At Blair Capital Management, based in Norwalk, Connecticut, I work with clients from all different backgrounds, with the main goal of helping them preserve, manage, and grow their wealth so they can pursue their financial goals with confidence. Call (914) 413-9904 or email johnblair@blaircapitalmgt.com to get started today. You can also schedule an appointment here. I look forward to hearing from you!

About John

John Blair is President and Founder of Blair Capital Management, LLC, a Registered Investment Advisor (RIA) that endeavors to offer personalized service and customized investment solutions to individuals, trusts, and high-net-worth investors. After over 40 years of experience in the financial markets, John has had a front-row seat in every bull and bear market and wants to offer his experience, knowledge, and skills to individuals rather than institutions. With an unwavering dedication to acting as a fiduciary and a desire to build long-term, successful relationships, John helps his clients pursue their financial objectives. He cares deeply about safeguarding and growing their wealth, so they can focus on their lives—not their money. He strongly believes in a disciplined approach to investing with paramount importance placed on preservation of capital and measuring risk and reward through all circumstances.

John holds a bachelor’s degree in economics and a master’s degree in business administration from the University of Southern California and also completed graduate work in economics and philosophy. John and his wife of 45 years have four grown children and 13 grandchildren. In his spare time, he loves to read biographies and books about history and finance and is a huge horse racing and football fan. John cheers for everything University of Southern California and has been very involved in alumni affairs and mentoring students.

Blair Capital Management LLC (Blair Capital) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Blair Capital and its representatives are properly licensed or exempt from licensure.

The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.

The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.

For additional information, please visit our website at http://www.blaircapitalmgt.com