There are 3 principals to an Investment Philosophy

First is Your True Purpose of Money  |  Second is Your Marketing Belief  |  Third is Your Investment Strategy.

Many investors if not the great majority do not think about an Investment philosophy. Most know they have to save for retirement or their kids’ college education or a vacation home but they really don’t think through the entire process.

Discovering your true purpose of money is perhaps the toughest question to answer. Discovering your true purpose of money is a process. You will not find the answer in a book. You will find it inside yourself with some soul searching.

A place to start is with a question. It is a tough question. It is what we call the “Dicken’s Question. Here it is; “If I were at the end of my life, what would have to happen financially for me to be able to say I have lived a life without regret?” Here are a couple of areas to consider in trying to answer the question.

  • Family: Who is most important?
  • Charity: Which ones? How Much?
  • Education: For whom?
  • Retirement: When? What standard of living?
  • Possessions: Cars? Toys? Jewelry? What else?
  • Experiences: Aventures you want to have?
  • Travel: Where? How?
  • Health: Yours? Family members?
  • Property: Homes? Land?
  • Interests: Hobbies or lessons you want to pursue?

Goals are things we strive for and they can be measured. However measuring the goals does not tell us why we set goals. If our goal happens to be a trip to Florida, we can state if we reach the goal of getting to Florida. It will be either be yes or no. It does not reveal why we want to go to Florida, what is or was the motivation? We might want to go for relaxation, piece of mind, adventure, love, happiness, beauty or many other reasons. After you clearly identify what motivates you, it is easier to appreciate those qualities once you reach your goal. These are the values associated with your goal.

Here are a few Value Words to consider; Security, Freedom, Love, Respect, Piece of Mind, Generosity, Fulfillment, Comfort, Creativity, Adventure, Independence, Happiness
Perhaps you can find your True Value of Money in one of those Value words. However, there are many more.

Once you define your True Purpose of Money you need to decide your Market Belief. There are only two and the one you choose will determine how you will invest.
The two views of the market investing are either markets set prices for goods and services efficiently or they fail to set prices quickly and accurately. Put another way, either you believe that free markets work or that they fail.

If you believe that free markets work then you believe that the price of any issue reflects all the known information that is available at the present time.
If you believe that free markets fail, you believe that prices react to information slowly enough to allow some individuals to analyze and predict the future price.
If you believe that Free Markets Work, you will use Structured Market Funds and follow Asset Class Investing.

The three tenets of Asset Class Investing are;

  • Own Equities
  • Diversify Globally
  • Rebalance back to Target

If you believe that Free Markets Fail, you will invest in Speculative Funds and use Speculative Investing.
The three tenets of Speculative Investing are;

  • Stock Picking
  • Track Record Investing
  • Market Timing

Here is a Summary


  • Focus on capturing market returns
  • Utilize asset-class or structured funds
  • Diversify prudently
  • Identify your risk tolerance
  • Eliminate traditional investment strategies
  • Work with a financial coach who shares your market belief FREE MARKETS FAIL
  • Stay connected to all sources of financial information
  • Work with a financial professional who shares your market belief
  • Read every investment article you can find
  • Pursue traditional investment strategies