• Use investments that people are comfortable with and have easy access to - mutual funds from large, well-established firms with competitive fund and brokerage fees.
• Maximize long-term returns while managing the investment risks involved. Allow people to adjust the level of risk they want to take through effective asset allocation.
  
• Use a mechanical, well-defined set of rules to pick mutual funds that are expected to out-perform in their asset class over the coming three months.
  
• Diversify across as many funds as possible to manage risk.
• Minimize trading costs and the time required to use the strategy.
• Base all strategy rules on how well they perform under rigorous back-testing. Take the guess-work out of which funds to hold!
  
• Have a defined set of rules that can be used to determine when the strategy may no longer be working.

• Anyone that has $10,000 to invest. We use this figure because we believe you should be able to invest in at least four mutual funds, and preferably more (ideal target is 11).
  
• Anyone that can have a Fidelity or Schwab account (standard brokerage, IRA/Roth IRA. and in some cases 401K/403b accounts if they support a wide range of fund options).
  
• Anyone willing to re-balance on a quarterly basis. Note that this can have tax implications for non tax-advantaged accounts like a regular brokerage account. Any position sold that's held for less than one year may be subject to short-term capital gains taxes.
• Anyone willing to spend a bit of time understanding the strategy and determining that this is an approach they want to use for a portion of their portfolio. While we believe the strategy is sound, past performance is no guarantee of future results.

1. The first step in using this strategy is to choose a mutual fund company. We've tested the strategy and provide fund picks for both Fidelity and Schwab, so an account with either firm is required. If you have a preference for Fidelity funds, then certainly open the account with Fidelity. Both firms offer a wide range of no-load funds. The strategy only uses no-load funds, and also takes fund expenses into account. One important aspect to consider is the fact that Fidelity funds often times have a lower fund minimum ($2,500) than some Schwab offerings.
2. It probably goes without saying, but you must determine how many investment dollars you're going to place in the strategy. This is of course completely up to you. You may have a single IRA that you want to try this with, or some portion of an account.
3. The strategy calls for placing funds in three asset classes - U.S. sector funds (one class), International funds (second class), and bond funds (the third class). In the ideal situation, you can put enough dollars into the strategy to purchase the funds recommended in each class: ideally four U.S. Sector funds, 4 International funds, and 3 bond funds. We suggest a percentage of funds to allocate to each asset class depending on how aggressive/conservative you want to be.
4. Informed Investing updates fund picks for each asset class (for both Fidelity and Schwab) each week. When you're ready to start using the strategy, assuming you've already subscribed to our service, you purchase the fund picks based on your allocation rules. For example, if you're an aggressive investor, we recommend that you place 45% of your funds being placed in this strategy in the 4 U.S. Sector fund picks, 40% in the 4 International fund picks, and 15% in the 3 bond funds picks. To make the math easy and to keep things organized, we provide a useful spreadsheet to assist you.
5. Every 93 days, you must re-balance your portfolio. This is a matter of logging in and looking up the latest fund picks here at InformedInvesting.net, and then making fund exchanges so that your holdings match the recommended picks. Again, the spreadsheet comes to the rescue and makes this process easier. In some quarters, you end up holding some of the same funds held the prior quarter, but may have to buy/sell shares so that your portfolio maintains the suggested balance across funds and asset classes.

That's it! While it may sound a bit confusing or take a bit of extra time the first time you go through the process, the good news is that you only have to exchange funds and re-balance your portfolio once a quarter. And, once you've done this a time or two, the process gets easier. As a side-benefit, this ensures that you're keeping an eye on your investments at least quarterly, which is always a good practice.

Informed Investing provides the fund picks, while you manage your account and perform exchanges every 3 months.

We'd love to be able to guarantee that all the funds we pick will increase in value, but of course that's impossible to do. We base our fund selections on rules that we've developed over the years, that have demonstrated an ability to out-perform the market averages.

If you navigate over to How It Works, we provide additional information on how we choose funds. Our strategy overview goes into more detail as well, and is available for free by registering with us.