Plan first. Invest later. This principle, as expressed in the title to this article, has been basic to the Sound Mind Investing philosophy from the beginning. It's such a crucial concept that I covered it in the opening pages of my book:

In order to find peace of mind in your investment decisions, you need to become an initiator rather than a responder. Initiators have a concrete game plan in mind. They have made the effort to develop a strategy that specifically takes into account both their long-term financial goals as well as their own personal investment temperament. It is shaped around what they hope to accomplish in the future, and it fits who they are "inside."

Make it your goal to become an initiator! Be like a shopper at the food market who buys only those ingredients needed to prepare a specific recipe. Before she goes to the supermarket, Cindy knows what she is looking for. When she is confronted with special promotions for products that aren't on her shopping list, she readily passes them by. Cindy won't need to spend any time at all considering whether to buy them because her shopping is purposeful. Similarly, before you begin to invest, put together a strategy that takes into account the risk of loss you can comfortably carry both financially and emotionally. The Sound Mind Investing Handbook

In other words, your investing decisions should always be made on the basis of a personalized strategy. Furthermore, your plan should be in writing. If your intentions are not down in black and white, with specifics spelled out, I have to wonder how committed you are. For example, who would you say is more likely to realize his dream of taking the family (grown kids and spouses, all the grandkids, the whole clan!) to Bermuda for a two-week vacation? There's Jack, who says he has every intention of doing it someday, and there's Tom, who talks about doing it in 2008 and can show you the cost estimates he's collected and the written savings plan he's started which is going to pay for it all?

If it's not in writing, it's merely an idea, a good intention. So, develop your plan and write it down. Keep it visible. You'll be tempted to deviate from it -- like when your brother-in-law calls with a hot stock tip, or the new car models come out and you'd rather spend than save -- but don't do it. Hold yourself accountable for carrying it out as planned. Stay the course.

Let's apply this "write it down" principle to a task faced by many new Sound Mind Investing subscribers each year ? transitioning from your current investing portfolio to our Fund Upgrading strategy that has proven so profitable in recent years.

Let's say your Level 3 account has been invested at Vanguard. It's up to you which discount broker you choose for your new SMI Upgrading account, but for purposes of this illustration, I'll use TD Waterhouse. Now, how do you get from where you are now to where you want to go? You make a list of the steps you need to take: