For those without a clear plan, investments can lead to stress, uncertainty, and even financial setbacks. Nik Aamlid, CFP®, CKA®, CAP®, Wealth Advisor at Pinnacle Wealth, believes the right investment strategy is the key to helping reach your financial goals with confidence. Below, Nik shares insights on how to create your own personalized game plan.
Why Having an Investment Strategy Matters
Nik compares investing without a strategy to taking a road trip without GPS. “Unknown directions produce unwanted outcomes,” he shares.
“Stacie’s [Nik’s wife] and my road trips were extremely stressful because she’d have the MapQuest directions that you used to have to print off, we’d hit busy traffic, and I wouldn’t be able to get to the exit. It just created anxiety and chaos because, really, we had no idea where we were going.”
Similarly, an investment strategy acts as your financial GPS, guiding you through market volatility and keeping you on course. “Ultimately, what we want to set is a sound investment strategy that can just help you live your life to the most stress-free extent possible.”
The Foundations of a Sound Investment Strategy
Nik touches on some great principles to consider when creating an investment strategy. Let’s dive deeper into these foundations and explore how they can help you build a strong financial roadmap.
Start With Your Goals
One of the first steps in building an investment strategy is identifying your financial goals. “You want to understand what the destination is and where you’re trying to go,” Nik advises. This involves asking fundamental questions like:
- What are you saving or investing for (retirement, buying a house, your child’s college tuition)?
- What values or priorities drive these goals?
Nik underscores the importance of adding purpose to your financial objectives. “If we’re just investing to invest, we’re missing the mark.”
Build a Plan
A plan helps ensure that every dollar you invest has a purpose. A strategy isn’t about stock-picking or market timing. “We want to build an investment strategy based on [your] timelines so we hit our goals.” For example:
- Short-term goals (0–2 years): Keep funds in cash alternatives or low-risk investments.
- Medium-term goals (3–8 years): Opt for an income-focused portfolio with moderate risk.
- Long-term goals (9+ years): Look at growth-focused investments for strategic, calculated risk.
This “bucketing approach,” as Nik describes it, helps ensure that funds are available when needed without exposing you to unnecessary risk.
Prioritize Risk Management
Every investment strategy must account for both risk tolerance (your emotional comfort with volatility) and risk capacity (your financial ability to withstand market fluctuations). “We want to be able to balance that,” Nik explains, because “both of those things become important in navigating volatile times.”
Without this balance, investors might feel confident during good market periods but become reactive during downturns, which can derail long-term plans.
Minimize Costs and Taxes
Nik emphasizes that managing costs and taxes is another critical element of a sound strategy. “We certainly want to manage costs and taxes,” he explains. This might include strategic moves like tax-efficient portfolio management or maximizing contributions to retirement accounts.
Commit for the Long Term
A common mistake many investors make is chasing performance or reacting emotionally to short-term market trends. The temptation to jump in on ‘hot stocks’ or pull out during dips typically leads to buying high and selling low. Instead, building True Wealth comes from adhering to a strategy and trusting in the plan over the long run.
“Picture someone walking up the stairs with a yo-yo,” Nik advises. “The yo-yo is going to be going up and down the whole time, but at the end of the day, it’s moving in an upward trend. That historically has been what the markets have been.”
Incorporate Personal Values into Your Strategy
Personal values and beliefs should also guide your investment choices, according to Nik. “We want to constantly be pointing back to someone’s beliefs and values and aligning everything that we do within the context of those,” he says. This might include:
- Ethical or Faith-Based Investing: Avoiding industries or practices that conflict with personal convictions.
- Purpose-Driven Goals: Ensuring retirement or educational savings align with broader life priorities.
Nik stresses that these conversations are foundational at Pinnacle Wealth. “Everybody’s goals are different. Everybody’s time horizons are different. Everybody’s values are different. So the collaboration process to me is an open dialogue.”
How to Stay on Track with Your Strategy
Nik advises revisiting your investment strategy regularly to ensure it reflects any changes in your goals, risk tolerance, or life circumstances. “At a minimum, revisit the strategy once a year,” he says. “Certainly, if in between, life throws you a curveball or times or horizons change, talk about that immediately.”
Finally, Nik emphasized the value of working with a financial advisor or guide. Working with a trusted financial advisor offers another layer of accountability and support. “So much of what I feel like our job is comes down to presenting options. Knowledge is power,” Nik adds. If you’re willing to communicate your needs, wants, and values to your advisor, you’ll set yourself up for financial confidence.
Take Control of Your Financial Future with Pinnacle Wealth
At the heart of every successful investment strategy is clarity, foresight, and alignment with your unique goals and values. With the proper guidance, you can build a plan that helps reduce stress and uncertainty—one that you feel confident in.
If you’re ready to create a strategy tailored to your needs, schedule a consultation with Pinnacle Wealth! Our team is here to help guide you on the path to true financial confidence.
