“An investment in knowledge pays the best interest.” -Benjamin Franklin
What is an Investment Strategy and Why Do I Need One?
Having an investment strategy is important to any investor, the seasoned veteran and the noob alike. An investment strategy is one’s roadmap or guiding force in how they would like to see their money grow over time. These strategies help investors to reach their goals, assess risk and deal wisely with their wealth. Some seek to sustain and protect their wealth, while others seek to gain as much as they can. Knowing your plans, needs and current financial situation helps in determining the right strategy, and how and where your money is invested. As time and circumstance changes for the investor, so will their investment strategy, usually.
Some strategies offer a more conventional, cautious approach, attracting investors seeking slow and steady growth and wealth protection. Others offer a more enterprising and ambitious approach, for those who seek higher or faster short term gains. No strategy is static, or shapes to any one particular group or person, they vary from investor to investor. These strategies are flexible and one can alter and utilize them in different ways, so it’s very important to evaluate one’s situation before making these investing decisions; making the wrong investment can be risky and costly.
Some Strategies
Elaborating on investment, it’s important to name a few methods and how they operate. We will look at them in further depth and detail as the week progresses, so look for posts involving these and more!
- Value Investing– Where an investor see’s the underlying monetary worth in a stock or business which is undervalued. Warren Buffet is often seen as the epitome of a value investor.
- Income Investing– Offers the investor a stream of income from their invested stocks, whether that be in the shape of interest on bonds, or dividends paid out over time.
- Growth Investing– Investors put money into a stock or company in which they see high potential for growth and advancement in the market
- Contrarian Investing– Buy Low, Sell High. With proper research and analysis, of course.
- Dollar-Cost Averaging- Disregards timing strategies, DCA offers stability in putting a regular, recurring investment into one’s portfolio every month (or any time period, depending on the investor).
Invest Wisely
These are but a few investing strategies, and can flex to work with any investor’s needs and desires. Knowing your current financial situation (cost of living income and saved capital), short and long-term goals, retirement plan and investment opportunities is the first step in finding out which strategy may work best for you. Again, we can apply different methods in different ways for varying scenarios; some apply more appropriately to certain situations. Know yourself, your plans and the opportunities which lie before you. Not Financial Advice, but invest wisely. Investment Strategies are your friend. Look out for more on ofthefreemarket.com!
