Formula Investing Law and Legal Definition

Formula Investing is an investment technique. It rigidly follows a prescribed theory or formula, using the results as blanket investment policy. One formula calls for the shifting of funds from common shares to preferred shares or bonds as a selected market indicator rises above a certain predetermined point - and the return of funds to common share investments as the market average declines. Formula Investing helps long-term investors simply and cost-effectively manage their money using the value-based investment strategy. It can be related to how an investor handles asset allocation, investments between funds or securities, or decides when and how much money to invest.