4. Delegating Decision Making

Always remember that it is difficult to do it all when it comes to investing. If you have a well-diversified portfolio and if you invest in the major assets classes and in some of the sub-asset classes as well -you are not likely to be able to actively manage all your investments effectively, unless you have a lot of time to allocate. It is important to stick to your strengths and interests and delegate out the asset classes in which you have a limited expertise.

An investor might feel confident trading large cap value stocks. As such, this person should concentrate their efforts on that asset class and delegate the investment management of other asset classes to someone else. Investors have several choices here, including active or passive management of the funds or assets they are looking to delegate.

5. Developing strategy

The value of an investing strategy is not in the strategy itself, but in how it is followed and implemented. In investing, there are two different approaches: a top-down or a bottom-up approach. The main factors will be the overall economy, monetary and fiscal policy, demographic changes, inflation, industrial sector trends and interest rates.

Other investors will take a bottom-up approach, analyzing individual companies, their financial statements, growth prospects and industry trends. However, depending on your own interests, knowledge and experience, one approach might be more appropriate for you.