12.18How to build an investment strategy
1What is it?
A written plan covering your goals, time horizon, asset allocation, what you buy, when you buy and sell, and how you manage risk.
2Why does it exist?
A strategy turns random decisions into a repeatable process you can review and improve.
3Diagram
- 1Define goals & dates (e.g. house in 7 years)
- 2Know your risk tolerance
- 3Choose asset allocation
- 4Choose instruments (index funds, stocks)
- 5Set rules: SIP amount, stock criteria, stops
- 6Review yearly & rebalance
4Quick revision
- Goals → risk → allocation → instruments → rules → review.
- Write it down.
5Knowledge check
Q1. First step in a strategy?Show answer
Define your goals and their time horizon.
Q2. How often to review?Show answer
At least yearly.
Q3. Why write it down?Show answer
So you follow it when emotions run high.