In today’s dynamic economic environment, having a well-defined investment strategy is crucial for any investor’s long-term success. With the widespread availability of investment information online, many investors attempt to build strategies based on various PDF reports and github code repositories found online. However, not all online resources provide sound investment advice. When leveraging online materials to build an investment strategy, it pays to be selective and focus on insights from reputable sources. This article examines key insights on building an effective investment strategy using online PDF reports and github code repositories in 2020.
Understand Your Investment Objectives and Risk Appetite
The foundation of any effective investment strategy is having clear investment objectives and knowing your risk tolerance. Before diving into specific investments, take time to reflect on your financial goals, investment time horizon, and comfort with volatility. Online PDF reports can provide helpful frameworks for this self-assessment. Some valuable resources include Vanguard’s Investor Questionnaire and Personal Investment Policy Statement templates. However, generic assessments have limitations. Consider working with a fee-only financial advisor to get personalized advice on setting appropriate objectives and asset allocation based on your unique situation.
Focus on Broad Diversification Across Asset Classes
Once your objectives and risk appetite are defined, most experts emphasize broad diversification across asset classes as a core principle of sound investing. Resources such as The Ivy Portfolio by Mebane Faber provide accessible explanations of why diversification is key and offer specific fund recommendations. White papers from Vanguard and Dimensional Fund Advisors also highlight the benefits of diversification based on historical market research. Overall, widely diversifying investments in stocks, bonds, real estate, and other assets has been shown to improve risk-adjusted returns over the long run compared to concentrated portfolios.
Understand the Limitations of Complex Strategies
With the rise of fintech and big data, some online PDF reports promote complex quantitative strategies for attempting to beat the market. Github repositories with algorithmic trading code also convey the impression that investing can be systematized into a money-making machine. While technology enables more sophisticated analysis, most complex strategies are unlikely to consistently outperform simple, low-cost, diversified portfolios. Resources like Larry Swedroe’s The Incredible Shrinking Alpha provide a helpful debunking of many technical trading approaches. Overall, avoid over-optimizing based on backtested models and focus on fundamentals.
Keep Costs Low and Take the Long-Term View
In addition to diversification, PDF reports and academic research reveal that minimizing investment expenses and adopting a long-term perspective are also key to maximizing returns. Resources like Charles Ellis’ Winning the Loser’s Game demonstrate how letting compounding work over decades with low-cost index funds leads to the greatest investing success. Github resources like the bogleheads investment philosophy also promote the virtues of simplicity, low costs, and patience. Filtering out market noise and sticking to sound fundamentals is usually the best mindset.
Leveraging online PDF reports and github resources can provide valuable insights for building an effective long-term investment strategy. However, focusing on resources that emphasize setting clear objectives, diversification, low costs, and patience is key. Avoid getting distracted by claims of easy market-beating wins and keep your investing philosophy simple yet robust.