Are you about to start your investment journey? You must start planning your investment strategies before starting with investment. The world of investing is wide and filled with a lot of speculation. The vast and risky field of investment can be narrowed down by working with proven and tested investment strategies.
Achieve your financial goals with some of the smart investment strategies. Check the top five investment strategies to set you ahead in your investment journey.
Why Framing Investment Strategies are Important?
Investment is one of the most important ways of growing your wealth and assets. However, the world of investing is huge and filled with uncertainties and loopholes. If you have your own property you can try real estate investment, or if you have wealth try stock market investment.
A lot of options are available when you think of investing. This raises the need to build smart investment strategies that can reduce your chances of loss and help you make good returns over time.
Key Investment Strategies Takeaway
- While framing your investment strategies, assess financial health, risk tolerance, and investment goals. Being self-aware is important in investment.
- A set of rules that help you reach your investment goals is called an investment strategy.
- Technical analysis is a pattern-based investment strategy where market patterns and movements indicate future price movements which help in informed decision making.
- Growth-based investment strategies are riskier than value based investment approaches.
Ask Yourself Before Investing
If you are starting your investment journey you must be self aware of the current situation and plan your investment strategies accordingly. Being real and judging the situation right is important in investment.
How much can you lose?
It is important to know your “risk tolerance”. Risk tolerance is how much you are prepared to lose that might not disturb your financial stability and needs. Learning the stock market and investing is a long process where you will go through losses as well as profit. However, it is important to know how much you can afford to lose and plan accordingly.
Do you know your financial goals?
When you are starting your investment journey, it is important to be aware of your end goals. Whether you are looking for a secured future or just some extra earnings. People often make investments to make themselves financially secure, especially for their old age as an alternative pension scheme.
It is important to be aware of your financial needs before starting investing.
How financially strong are you?
Ask yourself if you will be able to manage your finances with the money you’ve been making currently along with other needs. Falling in a debt trap is no good investing technique.
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Can you stay for long?
Well, short-term investment can provide you with high profit sometimes but can lead to huge losses too. Long term investment is a smart and proper investment strategy. Ask yourself if are you ready to be in the market long enough to build your financial wealth.
Can you manage market volatility?
The market is prone to sudden changes in the price of commodities or stocks. You will have to handle the ups and downs of the market smartly. Do not get stressed and make ill decisions that might disrupt your plan. The best way is to let the market settle and wait.
Know more about Stock Market Volatility
5 Top Investment Strategies for Beginners
Planning investment is a must especially when you are a beginner. Things might appear big and promising but without a plan you might put yourself and your earnings at risk.
A good investment strategy can minimise the risks of facing a financial loss and ensure good returns. However, it is said that in the stock market investment, “the longer you stay, the more you make.”
A good investment strategy focuses on giving time and patience before expecting to get rich. Let us discuss the top five investment strategies you must keep in mind.
1. Research is Important
First thing first, you need to choose a stock that might give you a higher return for a longer time. Carry thorough research before investing in a company stock. Go through their Financial Performance, health and records. Use financial ratios to evaluate the financial health of the company before making your final decision.
2. Follow up Trends
Nowadays, there are many gadgets and advanced technologies that can help you keep up with the latest trends. A trend refers to the direction the overall prices in the market are expected to move. For example, if prices are making higher highs and lower lows then chances are the movement will be uptrend. Swim along the path of flow and experience good growth.
3. Buy and Hold
When you buy a stock! You need to hold and wait. Frequent buying and selling is an unfair strategy for making good returns. If you are confident with a company stock, try to stay invested for at least three to five years. Your success rate depends upon the performance of the business over time.
Keep your patience and hold on, especially when the market gets rough. Control your temptation of selling frequently as it might not be valuable for long term investment.
Know more about Stock Market Trends
4. Diversification is important
The field of investment is large and the most important strategy is to never settle for one. Diversify your investment to incur minimum loss and higher returns. You can try your hands on real market investment, equities, mutual funds, bonds, and more. This will help you recover your loss easily when the market crashes and you will not lose all your money in one go.
5. Market Terminologies
It is very important that you keep yourself familiar with the market terminologies. Being familiar with the fundamentals of the stock market, market indicators, market research, and more will help you better adapt with any advancement in your investment journey.
Three Principles of Investment Strategies
Let us get into some depth of smart investment strategies below.
1. Value Investing Strategy
This is a smart investment strategy that consists of finding the right undervalued stocks and starting investing with them with the expectation that their prices will eventually rise in the meantime. Value investing strategy depends on market research and using various financial metrics such as price to earning ratio, debt-to-equity ratios, and more to select the right stock.
By investing in undervalued stocks, investors can extract the true value of a company stock. You need to be patient and calm to take a good value of the stock appreciation.
2. Growth Investment Strategy
This investment strategy focuses on investing in businesses with high growth potential. A growth investment strategy takes into consideration the future prospects of a company’s stock.
Financial health of a company and its performances are analysed to identify the growth stock. However, growth investment carries higher risks than value investment strategies.
3. Technical Analysis Strategy
Technical analysis focuses on analysing market patterns and indicators to predict future price movements in the share market. There are many tools and indicators to predict moving price patterns. It is helpful in finding patterns such as uptrends, downtrends, and reversals which can help in making informed trading decisions.
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Investment Strategies FAQs
Q1. What is an investment strategy?
Ans: An investment strategy is informed and smart planning to help investors achieve their financial goals with minimum losses. You must be well informed about your goals, risk tolerance, capital, and other factors before starting an investment.
Q2. What are the seven types of investment?
Ans: The seven major types of investment are mentioned below.
Mutual Funds
Equities
Bonds
Exchange traded Funds
Segregated Funds
Real estate investment
Q3. Who are investment strategists?
Ans: Investment strategies are experts who help individual investors and companies make smart financial decisions. They analyse various economic indicators, financial metrics, and provide advisory for smart trading strategies to their clients.
Q4. What is strategic investment?
Ans: Strategic investment is a planned investment in a company’s stock that can provide high value over time. Nowadays, many companies support startups or young companies that could be a valuable asset for the future. It is investing the smart ideas with promising futures and earning higher returns.
