Many people think about investing as anxious day trades, and alternating red and green market feeds. 

While these granular market features have their place, we think it’s best to zoom out and think about investing as a race of endurance, not speed. 

It’s our goal to help clients build wealth to reach their goals, and we’ve found the best way to do that is to take a long-term approach to investing

Today, we’ll dive into our top six principles for investing. These will get you feeling like a pro in no time. 

1. Managing Risk > Making Returns

It’s controversial, we know, but returns are NOT the most valuable part of constructing your portfolio; managing your risk is. 

You wouldn’t want to stash away all of your money for your kid’s school in risky equities only to have the markets tank the week before tuition is due and not have a backup plan. 

Market swings happen, and so do losses, but we help our clients create a dynamic risk management strategy to protect their wealth as they grow. Sounds pretty great, right?

But how do we help make that happen? Start by thinking through the following. 

  • Do you know your risk tolerance? 
  • How much could the markets drop without you batting an eye? 
  • Do you have concrete investment goals? 
  • What is your time horizon?

Your answers to all of these questions give us the tools and resources to create tailored portfolios aligned with your goals and needs. 

2. The Secret To Better Returns? Minimize Fees and Maximize Tax-Efficiency 

If investing is a story, your returns are the hero, and the fees are the villain. While that’s a bit facetious, it’s meant to illustrate the genuine role that fees play in your investment strategy. 

Actively minimizing fees is a simple and highly effective way to increase your net return. 

How can you do that? Prioritize low-cost investing. 

There are several securities like ETFs that have low expense ratios as well as fund, management, and operation fees. 

If your returns are the hero and fees are the villain, tax-efficiency is the guide or mentor overseeing the hero’s progress. 

For us, you can’t have a winning investment strategy without tax efficiency. It should orbit your entire strategy because it can dramatically impact your net returns when used correctly. 

What does this look like? 

It could be placing certain securities (stocks, bonds, etc.) in the most tax-friendly account (taxable, tax-deferred, etc.). This process is called asset location. Tax-loss harvesting is another key strategy to offset a higher taxable year. Other ideas include Roth conversions and making the most of non-taxable distributions. 

Different strategies will be appropriate at different moments. We look at your entire financial picture and work to maximize your returns in the long run. All of our investing tactics are centered on tax efficiency, and we’ll help you build a strategy that works for you. 

3. Diversification Is The Name of The Game

A little investment tip: Invest in the rainbow, not just your favorite colors. 

What does that mean?

You don’t want all of your investments tied into one individual stock. Having an over 10% concentration in an individual stock opens your portfolio up to much more risk. Overconcentration can easily happen with your company stock, for example. Even though it may seem counterintuitive, selling off some of your company stock could bring more stability to your portfolio. 

Think about it like this: would you be comfortable losing 10% of your portfolio tomorrow if your company went under? Likely not. That’s why it’s important to diversify your investments. 

Diversification is the practice of spreading your investments across different assets and market categories to balance risk and reward better. 

Diversifying your investments across different asset types (stocks and bonds), geographical areas (the U.S. and international), and sectors (technology, energy, health care, communication, etc.) brings balance and focus to your plan. It also helps mitigate risk and gives you a more long-term approach to your investments. 

4. Trade Trends for Long-Term Discipline 

We know that everyone has their “hot tips” for the latest and greatest stock pick (cue GameStop). 

But riding the trendy wave is like traveling to a new destination without a map, sure you *could get to where you’re going, but odds are you end up lost without gas and immensely confused about the next step. 

At CWM, we aren’t about the trendy trades or the latest fads; we are focused on guiding you with sound investment principles and diligent strategy. This means we concentrate our efforts on long-term decisions. 

There is a lot of confusion surrounding investing, and we want to pull back the curtain. For us, you must understand everything we are doing to help your wealth grow, which is why we focus on transparency and education. With us, you know what’s happening with your money, always. 

We’ll teach you how to distinguish between real opportunities and dangerous fads. We believe that long-term discipline will help you stay on the path toward your goals.   

5. Set SMART Investment Goals from the Start

Your goals are the bedrock of your investment journey. If you don’t know what you’re investing for, what’s the point? 

It’s essential to discuss your values and goals before coming up with your investment strategy; otherwise, it’s like going to the doctor and getting a prescription without first diagnosing your symptoms. You could end up with cold medicine when you really have the flu—not a great start.

Everything you do has a purpose, so it’s important to define the purpose for your investments, whether it be retirement, college, building your dream home, or anything in between. 

Goals shouldn’t be arbitrary ideas floating high in the clouds; they should have a focus and drive behind them to motivate your behavior and habits. 

A tip? Make your goals SMART. Let’s break down the acronym.  

  • Specific
  • Measurable 
  • Attainable
  • Relevant
  • Time-bound

Let’s look at an example of a family looking to pay for their kid’s college education

Specific: Paying for 4-year tuition + room and board at the University of Nebraska.

Measurable: Save $500 a month for 18 years in a 529 plan.

Attainable: Given time horizon, investment amount, and expected returns, you anticipate to have roughly $175,000, which should cover costs considering inflation.

Relevant: Paying for your kid’s education is an essential part of your financial plan. You want them to graduate with little to no debt so they can start off their career/adult life on the right foot.

Time-bound: You plan to save for at least 18 years.

You can apply this SMART formula to any investment goal. It brings depth and purpose to your goals and actually helps you achieve them. 

6. Your Investments Should Be Personalized

What worked for your best friends or your parents might not work for you when it comes to investing. You are a unique person with sets of goals, hopes, and dreams, all of which should be considered when building an investment strategy. 

Alongside your goals and values, your allocations should reflect your risk tolerance and capacity as well as your time horizon to be truly representative of your financial picture. 

We want to turn a generic photo into one rich with colors, textures, and movement that best encapsulates your goals for today and tomorrow.

We’ll Help You Build A Strategic Long-Term Investment Plan.

Building wealth is a stepping stone to helping you reach your goals. But it will be challenging to find investment success without first understanding your “why.” We start with your goals then help you craft a strategy that puts you in the best position to reach them. 

Ready to revamp your investment strategy? Let’s talk about it together.



The contents of this article are for general information and educational purposes and should not be construed as specific investment, financial planning, tax, accounting, or legal advice. Please consult with a professional advisor before taking any action based on the contents of this article. All investment and financial planning strategies involve risk of loss that you should be prepared to bear. We cannot guarantee any investment performance whatsoever, and past performance is not indicative of potential future returns.