Investment strategies are the set of guidelines that assists the investor to take investment decisions. To reach your financial goals the strategy should resemble your personal situations, investing time limits, and resistance to risk. The investment strategy varies from investor to investor. The beginner traders could build a strong foundation for the success in long-run with few specified strategies.
Before trading, it’s hard to understand the ground principles and techniques that have resilience to time. Better strategic approach helps the investor to handle the risks and multiply the returns. Whether you target to make a balanced portfolio, invest in market trends, or earn fixed income, utilizing these trading factors is important.
Here, let’s find out what are the eight common investing strategies that would help you take better financial decisions. Before landing up on any investment decision, it is highly recommended to seek the licensed and professional financial advisor to ensure the curated needs.
1) START WITH THE FUNDAMENTAL ANALYSIS
The Investment strategy that analyses the economic and financial factors of the company or asset is your fundamental analysis. It assists in eloquent asset’s value i.e., what are the prices when compared to the current market price and its potential growth.
This information is easily and readily available in public. The company’s marketing operations such as comprehensive financial statements tangible elements (revenue growth, loans, and earnings), and the intangible elements, for ex: the company’s operations and strategy. Evaluate and analyze the company’s insight values or stocks to determine for further investment.
2) ESTIMATE INVESTING
The investors use the basic analysis to evaluate the assets and stocks which are cheap in the market and purchase them at a reasonable or discounted amount.
It is believed that the market could react to news which give rise to unnecessary short-term fluctuations in demand and market price, though the intrinsic value will not change.
This reaction among investor’s permits to make an investment “on sale” and are rewarded and appreciated when the market gets back to normal and the value is recognized.
3) MAXIMISE THE INVESTMENT
The main aim to maximize wealth through long and short term capital appreciation is by increasing the investment. It is accomplished by buying the stocks which a great potential for upcoming capital growth.
The drawback of this strategy is not ideal for those investors, who seek steady income. The growth investors normally consider factors like asset’s existing health, company’s prosperity, and its potential growth.
4) TECHNICAL ANALYSIS:
As the fundamental analysis emphasis on the company’s asset value considering the internal factors such as company’s profits and losses, the technical analysis uses the pie-chart representation to anticipate the upcoming trends and patterns, like market’s unpredictable price movements, trading volumes, etc.
With this analysis, the investors could predict the upcoming patterns and invest respectively.
5) EARNINGS INVESTMENT
The investor’s targets to build the portfolio investment by to earn a regular income with the different structured investments.
The earnings can be in a form of dividends, allocation of funds, and bond or interests payments from mutual funds, market shares, real estate property, trusts and bonds. Income investors usually ponder on the consistency of last performances, growth, and profits to determine whether the investment is suitable for their portfolio.
6) BUY AND HOLD INVESTING
Here the investors purchase the stock and hold them for long time period irrespective of ups and downs in the market. This is termed as buy and hold investment strategy.
The common believe is that the longer the stocks are withholding the better the return on investment (ROI).
The investors are least bothered for short-term fluctuations and technical indexes in this type of investment.
7) ETHICAL INVESTING
The Ethical investments emphasis to make positive social effects.
Consider an example; investors may often invest the funds in companies that are collaborated in social justice and positive growth in environmental conditions rather than unlawful smuggling and life-threatening addictions.
The sustainable investors look for the companies that embark upon the world’s massive challenges, and are highly paced for growth.
8) CONSTANT DOLLAR COST
This investment strategy aims to minimize the effect of market’s fluctuation on the investment. In this approach, the investors invest the assets or stocks regularly in tiny fixed amount instead of investing in one go (lump sum). As a result, the investors at the end pay more average purchase price in the whole investment phase. .
FIND THE RIGHT STRATEGY FOR YOU
When you have planned the strategy, executed it, backtested the past data, and inaccuracies, and learnt the risk management, then the process kicks off.