Diversify, Diversify, Diversify
We’ve all heard the phrase: “Diversify, diversify, diversify.” This is an important investment strategy to consider as it can help to reduce risk and increase returns in various market conditions. It’s also helpful to keep in mind that not all investments are created equal.
Investment Strategies
The foundation of any investing plan is rooted in personal financial goals and how much risk the investor is comfortable with taking. From there, many different strategies can be developed to meet a variety of financial objectives. The most common are:
Investment Strategies: The idea behind this investment strategy is that over time, the stock markets have historically provided a high return on investment. By purchasing shares and holding them for a long period of time, this approach reduces fees and taxes that are typically associated with trading while eliminating the need to predict or react to short-term price fluctuations.
Dividend investing: This investment strategy focuses on companies that pay out dividends to their shareholders. This is based on the belief that these dividends can be reinvested for continued growth and provide additional income to investors.
Value and growth investing: This approach involves buying stocks that are thought to trade below their intrinsic value, i.e., that the market is underestimating their potential. It is often combined with dollar-cost averaging to smooth out the impact of market ups and downs.
Active and passive investing: These strategies differ from each other as they focus on different approaches to market dynamics. While a passive investing strategy seeks to minimize the effects of daily market fluctuations, an active investing strategy aims to capitalize on monthly, weekly and even daily price movements by frequently buying and selling assets to lock in gains.