When you’re about to do something small, you need a reason. When you’re about to do something big, you need a plan. When you’re about to do something life changing, you need a philosophy.

An investment philosophy is a set of goals and ideas that dictate the “who, what, where, when and why” of your investing habits. It governs your plans and guides your decisions. At its core, an investment philosophy embodies the rhyme and reason for why you’re investing in the first place. (For more, see: George Soros: The Philosophy of an Elite Investor.)

Determine Your Goal

Creating an investment philosophy without knowing what you hope to get out of investing is like trying to choose an exercise plan without having an end weight goal. Are you trying to save for an early retirement? Do you want to leave behind money for your family? Once you have your goal in mind, you’ll be able to find how much you need to fund that goal. From there, you work backwards by finding how much time you have left to invest and how much money you can afford to invest each month.

A financial advisor should help their client figure out their investment philosophy by pinning down what their main goals are and what’s reasonable for them. Once investors know what they’re trying to reach, advisors can determine the best course of action to help them succeed.

Find What Risk You’re Comfortable With

Just like each goal is personal for each investor, each individual has their own risk tolerance. Some people are fine with having most of their investments in stocks, while others want to minimize risk as much as they can. The problem is, many investors (especially young investors) need some risk to help grow their portfolio at an appropriate rate. The issue comes up when people who have volatile stocks in their portfolio start worrying when those stocks plummet. (For more, see: Risk Tolerance: Why Advisors, Investors Mess It Up.)

“If you freak out when stocks start falling, but you need a very high return on your investments, one that will only be possible with most of your money in stocks, then you should reassess your financial goals instead of taking on more risk than you're comfortable with,” said CFA Joseph Hogue of My Stock Market Basics.

In that case, you can either minimize the stocks in your portfolio or become more comfortable with risk. Advisors should also explain to their clients that some risk is inherent when putting money in the stock market. A good advisor can help their client understand the highs and lows of the stock market without becoming overly worried.

Keep it Simple

Creating an investment philosophy can be as complicated as you make it, but CFP Aaron Hatch of Woven Capital recommends that people keep it simple. That means investing in index funds instead of chasing the latest hot stock or trying to predict what the market will do next. The good news? Simplifying your investments doesn’t have to mean making less money. Choosing an index fund may leave you better off than trying to find your own stocks. (For more, see: 3 Passive Index Funds That Are Top Bets for Retirement in 2016.)

"The thing is, there are people who spend 80 hours a week and are paid a lot of money who try to invest better by building a better investment mouse trap,” Hatch said. “Yet many of these highly paid professionals take more risk and still underperform the S&P 500 Index, especially when you account for fees. For most people, simple is the way to go."

Determine Companies You Want to Support

When it comes to investing, most people just think about what kind of securities they should purchase. But many investors are also concerned about what companies they’re supporting with their dollars. Socially responsible investing has become more popular in recent years. Do you want to support companies that are environmentally friendly? Do you want to avoid all companies that experiment on animals? Do you want to put your money into alternative energy companies? Or maybe you want to support companies in your home state. (For more, see: Socially Responsible Investing: How Millennials are Driving It.)

You should determine which types of companies you want to support and which you want to avoid. If you’re using a financial advisor to help you plan your investments, share this list with them. This may require doing more research about potential investments, but it will help you stay true to your investment philosophy.

The Bottom Line

If you don’t have an investment philosophy lined out, you’re just saving blindly. You wouldn’t put as much time or money into any other area of your life without a clear and important reason, so don’t give investing the short shrift. (For more, see: 5 Traits the Best Financial Advisors Share.)