When you start investing, it is almost impossible to possess a strategy that matches your investing personality. But you need to know that only an appropriate strategy makes the most feasible and fruitful investment sense.
Here we encounter the first problem, how do you know which is the right strategy? This question has many possible answers. This is because there are (fortunately) several different ways to invest well and make money, which is our goal.
MANY CORRECT ANSWERS
Perhaps most surprising is to invest in stocks, and how many different ways there are to make money. Knowing some of the notable strategies that investors use is helpful:
- Growth investors focus more on companies with strong prospects for the future. Although rather not have to pay too much, they are willing to pay for the most promising companies. Google (Nasdaq: GOOG) is a good example, with over 75% annual earnings growth over the past five years.
- Large Capital Investments seeking stability established companies with proven track record. Actions such as Wal-Mart (NYSE: WMT) and Microsoft (Nasdaq: MSFT) has its most rapid growth phase behind them now, but shareholders do not have to worry about them collapsing at any time.
- Securities investors look for stocks selling at attractive prices. Like a Christmas shopper gets up at 4 am to buy “black Friday”, with the expectation of buying stocks with prices outside the market. Some fall in no time companies fail to recover, other as Fairfax Financial (NYSE: FFH), provide windfall when recovered.
- Small Capital Investors looking beyond safe actions and choose not business as specialty markets Chemistry- Innophos (Nasdaq: IPHS), which have the feasibility to change future designs. Although this tactic is much more risky, investors expect these losses to offset possible flaws with the great benefits of their triumphs.
- International investors , they recognize that there are large companies worldwide. They may run into companies such as Cemex (NYSE: CX) a lot in the financial pages, but their relative obscurity can also bring greater reward.
- Dividend investors , these value stocks that pay generous income. Dividend shares as Duke Energy (NYSE: DUK), with 4.8% of their performance, not always present great price breaks. But over time, these investors expect to get away from their counterparts.
What strategy is right for you?
The union of your financial goals and personal characteristics should always be your first tactic for investing. Here are some patterns:
- If you’re nervous about the market, it would be good to start with a conservative tactic as it is investment or securities dividends. The safety margin value stocks and steady income from dividend stocks absorb parts of collisions market downturns.
- It depends on the age the risks you want to take. So investors age ranges between 20 and 30 years may want to maximize your earnings potential with an investment in growth or small capital. Surrounding need for money is being invested is supplied, moving to regular large-cap stocks or conservative strategies.
- The first strategy, the International investment brings some challenges foreign-accounting systems, different rules and even cultural differences that may confuse you if you are not used to them. But if you’re up to the challenge, but perhaps with the help of international interest or experience-you may have more options than other strategies provided.
Finally, it is important to note that having a diversified portfolio is recommended, although it involves many different strategies, and investors often adhere to a specific tactic. The best thing is that as time passes we are acquiring expertise about these investment tactics, and finally learn how and when to use each.
The best investment strategy is always the one that you are the most likely to follow consistently, easily, and naturally. Start with one that matches your goals, but be open-minded as you gain experience-perhaps finding a different strategy that fits better.