Anyone can start investing immediately, but investment needs a plan carefully designed to achieve your specific goals.

Investing is highly customizable, so one size does not fit all! Everyone will have a different investment strategy depending on your age, time horizon, risk tolerance, liquidity, income, etc. So here’s how you can create better odds of investment benchmark success with these ten simple steps.


You cannot start investing if your basic life necessities are not covered. I am referring to food, housing, transportation, emergency funds, taxes, etc. If you are still struggling with these items, you are not ready to invest. Make some cash and invest the rest!

Let’s get the record straight. Investing cannot be your primary source of income at the outset, and unless you are investing significant capital to start with, rarely do you become a millionaire through investing.

The most critical step in investing is calculating your risk tolerance. Your risk tolerance is determined based on how you can stomach a decline in the value of your investments when a significant market decline happens. We calculate this for you through our Client Sustainability Assessment.


There are many reasons to invest: build a retirement fund, increase your cash flow, invest in college funds for your kids, or shelter yourself from taxes. Your specific goals will determine which assets you should invest in.

Remember you are not taxed on capital gains from your investment until you take profit. Consider your tax planning strategy to minimize your taxes with your investment returns.


Your investment goals will be met through your investment policy statement that outlines your goals. The time value of money calculation will give you a more specific approach to your goals. The time value of money will help you calculate the amount of money you need today to achieve a return at a specific period to reach your goals.

The time value of money will help you figure out how much to save every year for your retirement fund or how much to invest in a college fund every year for your children. We won’t dive into this further, but feel free to investigate the concept on the interwebs.


To evaluate your investments, you must consider your risk, return, and valuation.

For instance, if you have a low-risk tolerance, consider building a portfolio focusing on dividend-paying stocks with large-cap companies. If you have a high-risk tolerance, you may be able to explore more stocks with growth or value potential that have surfaced to Wall Street-level scrutiny.

This step and the following steps are what you should review every week when it comes to your investment portfolio. It doesn’t have to take more than an hour to analyze a portfolio of 100 assets. Your portfolio will probably have less than that.


You need to select suitable investments that meet your risk level and provide adequate progress with respect to your goals. This is precisely why relying on trading alerts and signals is the worst investment strategy. What works for others’ portfolios may not work the same for you because their risk tolerance and financial goals differ from yours.


Let the games begin! This is where you pick assets across different asset classes that are not perfectly correlated. In other words, don’t put your eggs all in one basket.

If you’re young, chances are you have a high level of risk tolerance, and asset classes like growth stocks, forex, and cryptocurrency are attractive to you.

If you’re closer to retirement, you’ll probably look for asset classes like dividend-paying stocks, ETFs, bonds, commodities, etc., to meet your risk tolerance and financial goals.

I’m not big on arranging asset classes by age criteria, but what’s most important is choosing assets that give investors meaningful satisfaction and peaceful sleep.


Your life and priorities will change over time. You may be young today, but tomorrow, you’ll have a family and kids so you may want a more sustainable approach to investing. Preferably, it would be best to reassess your risk tolerance, investment strategy, and priorities every year.

If you feel changes are needed, make sure your portfolio also meets those changes.

STEP 8: ROTH 401(k)s

Many employers offer the option to make Roth contributions to a 401(k) plan. For instance, in the 2022 plan, participants under 50 can make up to $20,500 in Roth 401(k) contributions, and participants aged 50 and older can contribute up to $27,000. A Roth 401(k) strategy allows you to do this in the spirit of tax-exempt growth during a down market.

By electing a Roth 401(k) over a traditional 401(k), you’ll pass up the opportunity to reduce your income in the current tax year. However, you’ll give yourself better control over your taxes in later years. Access to tax-exempt funds later in life will allow you to withdraw funds without falling into a higher tax bracket. There are currently no income-level phaseouts for Roth 401(k) contributions.


A Roth conversion converts a traditional IRA (pre-tax dollars) to a Roth IRA (after-tax dollars). Completing a Roth conversion requires you to pay taxes on the traditional IRA dollars the year the conversion occurs. However, when you withdraw money from the Roth account during retirement, those funds are tax-exempt (assuming you’ve reached age 59 ½ and have held the performance for more than five years).

Completing a Roth conversion during a down market allows converting a significant percentage of your overall account from pre-tax to after-tax dollars without incurring a larger tax bill. Bingo!

Your traditional IRA was worth $1 million on January 1. If you’re targeting a $100,000 income number for your conversion, this would represent 10% of your IRA in a static market. Following a market downturn, perhaps the same IRA has decreased by 20% to $800,000. The same $100,000 income target for a Roth conversion now represents 12.5% of the account instead. As the market eventually recovers, converting a more significant percentage of your portfolio will lessen your required minimum distribution (RMD) obligations in the future and give you a more substantial base in your Roth to grow tax-free.


Health savings accounts (HSAs) are the best of both worlds. HSAs reduce income today, and distributions are tax-exempt when withdrawn for qualified health expenses. Suppose an investor’s cash flow allows for it. In that case, they should consider passing on withdrawing funds from their HSA for current medical expenses to enable the account to accumulate and grow until retirement.

Down markets present an excellent opportunity for young investors to reduce income, invest in the market, and pay for future health expenses with tax-exempt earnings.

At TMW Advisory, we believe a comprehensive plan is vital to helping you achieve your goals. Finding the right strategy for you and your financial goals is most important. If you would like assistance connecting the dots between your investment strategy and financial goals, schedule a call with a member of our TMW team.

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