Having a strategy and the discipline to stick with it are the keys to successful investing

These two reader e-mails came the same day:

Q I would like to know all about the stock market, what you look for in stocks and how you go about picking winners and why you feel you have been successful. Can you help me?

Q I was always taught that your money should work for you. I'm looking for an investment to grow dramatically over the coming years. Any advice you can give me would be great.

A You both have come to the wrong person.

I don't own any stock directly and haven't owned any since I sold all shares in my employee stock-ownership plan after I retired from full-time work in 2000. I shy away from direct ownership of stocks to avoid even the appearance of a conflict of interest as a personal finance writer and because I prefer the greater diversification of mutual funds and exchange-traded funds.

I don't know of any investments that will grow dramatically over the coming years. Nobody does, least of all the self-anointed gurus and investment newsletter publishers who promise HUGE, HUGE PROFITS in bold-faced letters if you subscribe.

If they really knew, why would they tell?

Could it be their real profits come from the money their clients and subscribers pay them, rather than from the investments they so loudly tout?

My success as an investor - yes, I have been successful - has come not from picking hot stocks but from having the discipline to adhere to basic and time-tested principles.

I've always had a clear goal, including knowing the amount of money I wanted to have at different stages in life.

To achieve that goal, depending on how much money I would save every month, I calculated the rate of return my investments needed to achieve. I then picked an asset allocation likely to give me such a return with the least amount of risk.

Asset allocation in its broadest sense means how you divide your money among different asset classes, such as stocks, bonds, and cash.

I believe that low-cost, broadly diversified mutual funds and exchange-traded funds are the most efficient and effective building blocks that investors can use for their asset allocation, particularly their allocation to stocks.

Many people I respect disagree and argue that investors willing to put in the time and effort can build a diversified portfolio of stocks on their own without the management fees, other costs, and potential tax drawbacks of mutual funds.

Those who want to learn more about picking stocks - and investing in general - should consider joining the American Association of Individual Investors (go to aaii.com), a not-for-profit investor education group founded in 1978 with about 150,000 members.

At $29 a year, its basic membership is one of the best bargains I've found, providing a wealth of investment education and guidance, including an ad-free magazine 10 times a year, annual mutual fund and tax guides, model stock and mutual fund portfolios, and free stock reports.

The magazine never touts "must buy" lists or "hot tips" but rather stresses investment education and understanding. The website, while offering special content to members, also has extensive free educational materials for everyone.

Another not-for-profit investor education organization worth considering is BetterInvesting (go to betterinvesting.org), formerly the National Association of Investors Corporation.

BetterInvesting, an umbrella group for nearly 12,000 local investment clubs, offers a free one-month trial membership. After that, it costs $6.95 a month or $79 a year.

For my money, I prefer AAII. But BetterInvesting may appeal to those interested in forming investment clubs, and several people I know belong to both organizations.

Humberto Cruz is a columnist for the South Florida Sun-Sentinel. He can be reached at AskHumberto@aol.com.