In financial terms, an investment strategy would be a well-defined series of tactics, rules or methods, designed to guide the selection of an investment portfolio for the purpose of gaining returns. People have various profit goals, and each of these varies as much as the investments they make. Investment strategies need to be well thought out in order to achieve the best returns. In business, strategies determine how things are done, and this can be applied in many ways – even for making investment choices.
Instead of investing in the stock market, you could instead pick the currencies that are most likely to gain in value (based on your strategy), or the companies that have the strongest brands in your chosen industry. For instance, if you were looking for a good opportunity to make money in the stock market, you may want to invest money in the Canadian dollar. When you do that, you are basing your portfolio on the strength of a particular currency pair, rather than on the performance of the American stock market.
Growth Investing: Growth investing is about putting your money in areas where the returns are expected to be large over time. In this type of investment strategy, the goal is to make profits by earning a return on invested funds. The ideal places to do this include areas where the production growth rate is high. Some of these areas include Latin America, China and emerging markets such as the Middle East. This type of investment strategy works best when you are prepared to take a long term view of an area and to remain invested for the long term.
Cash & Growth Investing: Cash & growth investing is a style of investing that buys low and sells high.
The idea is to make money by buying a stock at a bargain price and then holding onto it. For example, a stock could be bought for fifty cents and held for two weeks, during which it would gain just over one percent. You would then sell the stock for one cent per share, net profits after fees are figured in.
These strategies all have drawbacks. Some, like short term momentum investing, only work if there is an upward trend in investment. Others, such as growth investing, work best for long term gains. Still others, like the buy and hold investment strategy, are best used with a well thought out overall investment strategy. In all cases, though, the main idea of the growth and cash strategies is to allow investors to use their money to make profits while minimizing their risk.
The strategies described above, in combination with other strategies from mnacommunity.com, form what is known as a portfolio of investment strategies. These portfolios are designed to allow investors to use the financial assets they own in order to grow the value of their net worth and generate higher returns. Each investor uses his or her own personal strategies and those of other investors in order to create a successful portfolio. All of the strategies in the portfolio are meant to increase the overall net worth of the investor and to increase the amount of return that each investor receives.
Different types of investment strategies exist.
Some use growth or inflation-adjusted returns to increase the amount of annual returns. Others use dividends and capital gains to add to the annual returns. Still others may be geared towards using a few investment strategies, or none at all.
An investor can use a combination of these strategies to increase the amount of return on the investment he or she makes. Investments should always be monitored and analyzed to ensure that the money being put into the portfolio is being used correctly. By doing so, investors will be able to see whether or not the strategies they are using are actually creating higher returns than the cost of the investments. By ensuring that these strategies are used appropriately, investors can increase the amount of annual profits that they make and increase their net worth.