Investing your money in any plan will fetch you long term benefits when you do it with a properly planned investment strategy. Good investment strategies can give an extra edge to your portfolio and increases your chances of success at a significant rate.
Now before going for investment strategies you need to know the various types of investment strategies that are there. Let us understand them.
Value investing
This is an investing strategy which was popularized by Warren Buffet. The main principle of such type of strategy is to buy those stocks which are cheaper than they actually should be. Now it takes a lot of research and time to find out underpriced stocks. For this, you need to understand the fundamentals of the lying companies. One needs to be quite patient with this kind of strategy, and later they are rewarded with a good payoff.
Income investing
This is considered to be great when in terms of binding up your wealth over a significant amount of time. In this type of investing strategy, one buys the securities which are typically paid out returns on a regular period. Now for the fixed income securities, bonds are the best example. Other than that, there is ETFs, dividend-paying stocks, real estate investment trusts, mutual funds, etc. this provides a reliable income stream.
Growth investing
The main focus of this type of investment strategy is on capital appreciation. In this, the investors are continuously looking out for those companies that have above average growth from their revenues and their profit margins. Thus in the growth investing, one gets to invest into small smaller companies having good potential of growth and shows signs of an emerging market. This type of investment strategy is considered to be little risers than the above two mentioned.
Small cap investing
Now, this type of investment strategy is most suitable for those who won’t hesitate to take some risk in their portfolio. In this type of investment strategy, one has to purchase those stocks that are of the smaller companies and on top of it; those companies will have lower margins. Now the reason why the companies with small caps look appealing to the investors is that they can quickly go unnoticed. While those companies that have large capital stocks are often having high chances of getting inflated price. Now it is suggested that people who are experienced in the stocks investments should only go with this. This is because these are relatively more volatile and hard to be traded.
Socially responsible investing
In this type of investing strategy, there is a portfolio such that, the companies will maintain a universal friendliness while also keeping up with the competition side by side. Now in today’s trading market, a majority of the investors and the traders expect the companies to be able to maintain a social conscience.
Conclusion
Thus the above mentioned are the five different kinds of investments strategies that one can follow. One should choose them by an individuals’ capability and demands.