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Anonymous

18 Apr 2019

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General Investing

What are some good investment strategies?

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Hi, this is a rather broad question, since it really depends on the type of risk you are willing to take, and the commitment level towards your investments that will dictate how actively you will manage your investments. But essentially, there are a few investment strategies, as listed below.

1)Growth Investing

Growth investing is somewhat different from value investing, in the sense it's focus is not about the valuation of the stock, but more of its above average growth potential in profits and revenue, which in turn should drive up the price of the stock. This method was largely used by Peter Lynch, whose growth investment strategy cemented his place as one of the legends of the investment and mutual fund world. This method is somewhat risky, in the sense that firms that exhibit such growth tend not to be as stable as your blue chip stocks.

2) value investing

this type of investment is largely made famous by Warren Buffet, but can be attributed to somewhat the "founder" of value investing, Benjamin Graham. Simply put, what value investing does is to buy stocks which are deemed to be "underpriced", meaning to be at a price below that which you think is the fair market value. This fair market value is determined via extensive fundamental analysis and research of the company, which I suggest looking up the many extensive resources provided by the libraries and websites such as Investopedia to obtain the necessary information to do so. But when you find such gold mines, you essentially will buy and hold them, possibly for long periods of time until it rises.

3) income investing

Income investing is relatively a stable and efficient method of wealth accumulation, whereby your investment portfolio contains securities such as bonds and high dividend payout stocks that payout at regular intervals, which is almost like your investment "salary". Such securities are like your bonds and REITs, and their attractive dividends and coupon payouts at a somewhat low risk allows you to more accurately plan for your expenses, especially for retirement.

4) Small Cap Investing

Small cap investing is essentially investing in small market capitalization firms (meaning that the valuation of their firms are quite small relative to other companies, perhaps from a few hundred million to 1 or 2 billion). Such smaller companies look quite attractive to investors because such smaller companies carry greater risks in investing in them - they have less information and are much more volatile in terms of performance as they are much more affected by movements in the market, lacking capital to buffer against potential shocks. However, this means that such companies go unnoticed, and experienced who are able to pick out these small cap firms are able to reap substantial profits in their investments when the firm starts to experience rapid growth.

5) Socially Responsible Investing

what this investing method means is to invest largely in sustainable, socially responsible companies that have a proven track record of thinking beyond profits to help play a part in helping the environment, the needy - maintaining social conciousness. This form of investing for investors also looks beyond purely capital gains and dividends, but to also "support" the socially responsible firms and "boycott" those that flout regulations regularly.

TLDR: Understand your investment goals and timeline first, as well as your own personal risk tolerance, before jumping straight into the types of investment strategies listed. Of course, this list is not mutually exclusive nor exhaustive - you can be able to create your own type of investment strategy, or mix 2 or 3 in different proportions, but at the end of the day you must understand what you are buying into, and be willing to take the risks involved.

I hope this helps, and if there are any issues, feel free to correct me!

As Nicholas mentioned, find one that suits you and go with it. For me, it's selling options (bull puts, iron condors and straddles) to hit the 60% pa roi requirement I have. A bit more advanced but worth it to supercharge your portfolio returns

Luke Ho

22 Feb 2019

Founder and Director at CFX Money Maverick Pte Ltd

Depends how you define strategy. You really don't need much, to be honest.

1) Buy an investment t...

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