Investment Strategy: What works best for you?

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.

Growth Investing
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.

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