Top 7 Types of Investment Strategies
Investment strategies are aimed at helping investors to select where and how to invest in accordance with their anticipated return, risk capacity, holding periods, age of retirement, industry choice, and more. Investors can also create investment strategies on the basis of the objectives they want to attain. Now let’s take a look at some of the effective investment strategies which will help investors make a smart decision regarding their investment. Oil trading is also one of the popular investment opportunities for investors. The increasing demand for oil is attracting more investors to oil trading. Automated trading platforms like the oil profit is also helping the traders to maximize their profits. Take the oil profit test to find the benefits of using an automated trading platform for oil trading.
- Passive and Active Investment Strategies – In the case of passive strategy, the stocks that are bought and held are not traded frequently to avoid the higher cost involved in the transaction. This is due to that stock traders assume these stocks cannot beat the market due to their volatile nature. Hence, a passive strategy involves less risk. However, in the case of active strategies, stocks are often bought and sold, as stock traders believe that these stocks are capable of beating the market; thereby they will be able to earn more returns.
- Long-Term and Short-Term Holding Strategies – The investors determine how long stock should be held on the basis of the value they want to create in their portfolio investment. The investors will make sure to invest in those companies which they assume to grow exponentially in the coming years and also their stock’s intrinsic value to have a great increase. This is literally growth investing. On the other hand, the investors will consider holding a company for a short period of time, which they assume to deliver great value to their customers within a year or two. Blockchain technology is also an innovative technology that stores customer data safely. Cryptocurrencies are the best option for safe transactions. Visit the Insidebitcoins site to learn to buy cryptocurrencies easily.
- Value Investing Investment Strategy – In this strategy, the investors will invest only in those companies whose stocks are trading for less than their true value. This means that those stocks are undervalued. By doing this, the investors will be able to get good returns when they sell these stocks, as the prices of these stocks are likely to increase when the market corrects their values.
- Income Investing Technique – This strategy is ideal for those investors who want a fixed income from investments. Instead of investing in stocks, this strategy work towards creating cash income from stocks.
- Dividend Growth Investing Strategy – In the case of this investment strategy, the investor prefers investing in those companies that have continually paid their dividends, as investors are aware that such companies will be stable and less volatile in nature than those companies that miss dividend payout each year.
- Contrarian Investing Strategy – This strategy involves buying a company’s stocks during the down market. So that investors can buy when the price of the stock is low and sell when the price is high. However, investors should make sure to invest in those companies only that can increase the value and have good branding.
- Indexing Strategy – In the case of this strategy, investors will invest a small percentage of stocks in a stock market index. These can be mutual funds, Standard and Poor’s 500, and ETF.
In fact, a good investment strategy is crucial for investments. Having an effective strategy helps eliminate poor investment portfolios and increases the likelihood of success. You need to set an investment objective first, this will help you make a well-informed decisions regarding your investment. In addition to that, you have to look for better opportunities and never try investing on the first attempt.