There are numerous
kinds of strategies. You need to analyze what kind of strategy would suit you
best before choosing the perfect one for you.
An investment strategy is your plan of attack to guide your
investment decisions based on your own goals. You also need to put in
consideration your risk tolerance and future needs for capital.
There are different components that make up an investment
strategy. This includes asset allocation, buy and sell guidelines, as well as
risk guidelines.
You need to ensure that your strategy aligns with your
goals. You should also follow the strategy you choose down to the very end.
So here are the top 5 investment strategies that you can
choose from.
This is a strategy that will help you focus on capital appreciation.
As a growth investor, you will be looking at companies that
show signs of above-average growth. You can determine this by checking on their
revenues and profits. You will invest no matter how expensive it might be in
terms of metrics, like price-to-earnings or price-to-book ratios.
Socially
Responsible Investing
This will exhibit a portfolio filled with environmentally
and socially friendly companies.
Despite a friendlier-atmosphere, your companies should still
be competitive alongside other kinds of securities in a usual market
environment.
These days, people – investors and the general public –
expect that companies will be maintaining some social conscience. They then end
up putting their money where their mouths are. This strategy can help seek
returns that can give substantial collateral benefits for both parties.
Income Investing
This strategy is a great way of building wealth as time
passes by. This involves buying securities that will generally pay out returns
on a steady schedule.
If you decide to put together a portfolio based on this
strategy, you can expect to produce a steady stream of cash that be spent today
by taking from a collection of higher-than-average yielding assets.This cash
can then be used in whatever way you like, paying bills, restocking your
fridge, staying healthy, giving to charity, or anything you want or need.
Value Investing
This stock has a simple principle: buy stocks that are
cheaper than what they should be.
As a value investor, you will be searching for stocks that
you believe the market has undervalued.
If you’re the kind of investor that believes the market and
general public overreacts when it comes to good and bad news, then this
strategy might be it for you. If you find opportunities with the results of
these overreactions – stock price movements that does not correspond with a company’s
long-term goals, giving a chance to profit while the price is deflated – then look
no further than this strategy.
Small Cap
Investing
If you’re looking a little more risk in your portfolio, then
this one’s for you.
A small cap stock can be a company that is worth less than
$2 billion, though there is no exact value that acts a line between the small
cap and large cap stocks in the market. With this kind of strategy, you will be
working on an investment that garners little-to-no attention.
This lack of attention is usually due to two reasons:
investors tend to stay away because of higher risks; and institutional
investors setting up restrictions when it comes to investing in small cap
companies.
This kind of investing strategy is more advisable to
experienced stock investors.
