Investment Strategy

In my opinion, buying income is the best definition of investment. Any strategy that bets on increasing values is speculative by definition. My strategy is to focus on investments that provide an attractive current yield. This approach of buying income also informs my attitude toward risk; I research the possibility of cash flow being reduced.

Using this approach makes tracking progress relatively simple. Each time I buy more income, I make progress toward my goals. It also puts market value fluctuations into perspective. The market value of the investments may rise or fall, but the income is likely to remain relatively consistent. That helps me to avoid emotional reactions. Market increases aren’t cause for celebration. Market crashes aren’t cause for panic. Better yet, market crashes provide good opportunities to buy income at relatively low prices. Focusing on yield helps keep this in perspective.

There are many different investment strategies, each of which can be successful. I have found that choosing a strategy, then sticking to it, keeps me from being distracted by a changing economic environment. Switching frequently between strategies is an almost sure way to lose money. If you disagree with my strategy above, my ideas about specific investments may not be useful to you.

If you read any of my investment ideas, please be familiar with the disclaimer.