Investing Strategies: Choosing Your Style

In the world of investment, there are many different investing strategies that you could potentially choose from. Each investment strategy carries with it some advantages and disadvantages. Here are the basics of how to choose the investment style that is best for you.

The Best Style

Many investors are constantly looking for the best investment strategy that is available. With so many strategies to choose from, many investors go from one type of investment to the next looking for the strategy that is superior. In reality, there is not one investment strategy that is completely superior to the others. All of them have some good and bad associated with them. Depending on market conditions, one strategy might be doing better than the others. Then, whenever the market changes again, that strategy might perform awful while the others do well. This means that when you are choosing an investment style, you have to weigh all of the factors that are involved.

To Each His Own

With this in mind, every individual investor is going to have a strategy that they prefer. One strategy will not work for every investor because every investor is completely different. Individuals have different risk tolerances and levels of patience. For example, one person might be content to earn a steady rate of 5 percent per year for their entire life. Another person will not be happy unless they are earning more than 10 percent per year. In order to increase your returns, you are going to have to take on riskier investments as well. This is why each investor is going to have to choose his or her own strategy. You will not be able to benefit from a blanket recommendation from an investment guru. You will have to learn about all of the different investment strategies and choose the one that is best for you.

Strategies

Many investors choose to utilize a growth investment strategy. With a growth strategy, you are going to seek out companies that have a large potential for growth. Your main objective with this strategy is to create capital appreciation for your portfolio. You are not concerned with dividends or any other influences when selecting your stocks.

Income

Another type of popular investment strategy is when you try to create income. This can be done by investing in fixed income securities such as corporate bonds. This type of investment will provide you with a regular interest payment for the life of the bond. This type of strategy has minimal risk and steady returns. You might also choose to invest in stocks that pay a regular dividend to their shareholders.

Value

You might also choose to utilize a value investment strategy for your portfolio. With this strategy, you are going to attempt to identify securities that are undervalued in the market. You will then purchase these securities and realize a profit whenever the securities start trading at the proper price.

 

blog comments powered by Disqus
Scottrade