Popular Investment Strategies
Investments are a critical component of solid financial health. With solid investments, you can increase your overall income and put yourself (and if applicable, your family) in a more comfortable financial position. But starting out with investing can be daunting. There are many different types of investments and even different investment strategies to consider. The following guide will cover some of the most popular investment strategies in today’s economy.
What is Growth Investing?
Growth Investing is a popular strategy because it relies heavily on data sets and statistics. Of course growth investing involves studying various trends. Planners study the market in order to predict which investments are likely to grow in value. It will give insight to which are likely to stagnate or decline in value. This strategy is popular because it is considered more research-based than others. Remember it does come with a notable downside for anyone interested in “quick” investments. Investments like these are a long-term type of strategy that involves long-term research into specific investments, trends, and growth potential.
What is Trend Investing?
Sometimes called momentum or forward investing. Trend investing refers to putting your money into investments which are currently experiencing an upwards trend. In simple terms: when an investment’s value starts to rise, the investor will place more of their financial stock into that particular investment. This strategy does have the potential for some serious payoff. However, it does require significant research into: current trends, history of companies and specific stocks. Also the potential for serious failure if the trend ends up flopping rather than rising high.
What is a Buy/Hold Strategy?
To explain it simply, the Buy/Hold Strategy involves purchasing stocks and holding them until you decide to sell them. This is a fairly simple strategy that operates on a basic premise: that eventually, any stock will increase in value in the future. Indeed this strategy is considered to be simple because it does not require intense research, predicting growth or other components found in different popular investment strategies. The downside is that not all stocks are going to increase in value, so you may end up “holding” investments which do not increase over the years. On the other hand, being patient with certain investments may pay off in the end if that investment experiences a swing in growth.
What is Value Investing?
The value investing strategy is somewhat similar to the buy/hold strategy. There is a crucial difference: whereas the buy/hold strategy works on the assumption that a stocks value will rise in the future, the value investing strategy works based on the notion that stocks values are inherently irrational, and that buy purchasing a diverse amount of low-value stocks, at some point one (or more) is going to rise in value. This particular strategy is considered beneficial for many reasons. Including the fact that it allows you to create a diversified stock portfolio. A low cost due to the use of low-value investments.
Conclusion
If you aren’t sure which of these investment strategies is right for you, you may wish to consult with a financial advisor. Ask a certified financial advisor about your interest in investments. Also review which strategies may prove to be more effective for your particular needs.
