I met recently with Leo and Jonathan. They told me something I found unsettling. “We’ve heard,” Leon said, “that the best time of the year to invest in the stock market is November through May.”

Jonathan leaned forward. “So shouldn’t we put more money into stocks right now?”

I shook my head.

Investing based on popular theories, many of which are false, can hurt you. Rely on seven basic principles. They create a framework for making good decisions to achieve appropriate returns based on your particular life and financial goals.

1. Develop an investment plan. Not someone else’s plan. Your own! That includes achieving reasonable performance based on conservative return assumptions. As I advised Leo and Jonathan, “Get rich slowly.” First, determine your cash flow and how much you can invest monthly. Then figure the percentage of your investable income to go into each asset class and individual securities. And remember: To achieve your financial goals, you have to keep adding to your investments — in effect, saving money — each month. Of course, as their financial adviser, this is where I helped them.

2. Determine your time frame. Are you investing for a house, a college education, retirement? The longer you leave assets invested, the more risk you can take.

3. Understand your risk tolerance. The higher your asset values, the more risk you can tolerate. Say you’re more than 10 years away from retirement. You can tolerate more risk; there’s time to make up losses. But what if you’ll need a large amount of cash in two years? Safety of principal counts more than total return.

A good test of your risk tolerance is how you felt in 2000 and 2001 during the dot-com bust and in 2008 and 2009 during the financial credit meltdown. Did you sleep OK as your investments declined in value? Did you sell in a panic?

4. Diversify your portfolio using passive index investing.

You can get the same or better returns and lower your risk with a portfolio that spreads out assets over different (non-correlated) class types. These won’t all move up or down at the same time. You may not feel like a casino winner in good times, but you’ll weather the bad times.

5. Keep expenses low. Morningstar, which rates mutual fund performance, conducted an interesting study. It showed that the best predictor of an open-ended mutual fund’s performance isn’t Morningstar’s own rating system but fund-expense ratios. Low expenses drive net returns higher. Morningstar.com is a good source to discover expenses. So is Yahoo Finance. Other sound investment sites include TD Ameritrade (I use them as my broker custodian), Schwab and Fidelity.

Generally, index funds and exchange-traded funds have the lowest expense ratios. They also provide instant diversification. If you use a financial adviser to manage your portfolio, make sure you know what fund expenses you’re paying. Total fees for mutual funds, exchange-traded funds and fees to your adviser should be under 1 percent. Online services offer model portfolios with very low expenses. But if you want a personal relationship — questions always pop up in this complicated world — an online service isn’t likely to work for you.

6. Rebalance periodically. You’ll devote a percentage of your assets to stocks, another to bonds and another to alternative investments. The markets will send you a message. When stock prices soar, the percentage of stocks in your portfolio will be greater than your plan allocation. That’s when you sell some stocks. In effect, you buy low and sell high. When stocks plummet, that’s the time to buy and keep your portfolio on target. This strategy takes emotion out of investment decisions — a good thing. As a financial adviser I regularly evaluate performance and rebalance once per year.

7. Stick to your plan. The markets are famous for volatility. Long-term investors ride out the lows and, from time to time, take advantage of the highs. Stay the course unless you experience a significant change in your life that requires re-evaluation.

I smiled as Leo and Jonathan agreed that these guidelines would help them.

“But,” Leo said, “given how many investment opportunities are out there, I suspect they’re more challenging to put into practice than we think.” That’s true. In my next column, I’ll discuss different types of investments so you can determine which are right for you.

Ira Fateman is a certified financial planner at SAS in San Francisco who conducts free personal finance workshops for Hebrew Free Loan (www.hflasf.org/financialfitness). Reach him at [email protected]