investing principles for success

A google search for the word principle provides this definition; a fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning.


In my business of providing financial advice I find that having core principles is a great way to help make wise financial decisions. Our finances are largely influenced by our behaviors and emotions, so even if you have the head knowledge it can be easy to get in your own way. I’ve developed Financial Principles and Investing Principles and often refer to them in the plans and investment strategies I create.


Charles Schwab agrees with having principles for investing and I recently came across an article of their 7 Investing Principles. I have listed each Schwab principle under what I believe is my corresponding principal. Note, I’ve sought to base my principles on biblical wisdom and have listed some verses for reference.


Maintain broad diversification – Ecclesiastes 11:2


- Build a diversified portfolio based on your tolerance for risk

- Build in protection against significant losses


Align your investments with your objectives – Proverbs 13:16, 24:27


- Establish a financial plan based on your goals


Don’t let fear or greed drive your decisions – Hebrews 13:5, Luke 12:15, 1 Timothy 6:9-10


- Ignore the noise


Be disciplined and consistent – Proverbs 13:11, 14:29, 21:5


- Start saving and investing today

- Rebalance your portfolio regularly


Consider taxes and fees – Matthew 22:21


- Minimize fees and taxes


People often manage their money in a reactive way rather than being proactive and purposeful. I’ve seen millions of dollars lost or unrealized due to violating or not having principles such as those above. What are the principles that guide your investment strategy? 




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Rancho Bernardo Financial Planner