A good investment strategy is a plan that helps you make better decisions with your money. It includes setting financial goals and developing tactics to achieve them.
If you’re a smart investor, you know it’s important to make a plan before investing your money. Some people call this plan an “investment strategy.”
When building an investment strategy, you should consider how much money you want to invest, how long each investment will last, and what kind of return you expect from each investment. Most importantly, you should pick investments that match your financial goals.
For instance, if one of your goals is to save for retirement, you may want to invest in stocks or exchange-traded funds (ETFs). These investments are riskier than other types of investments, but they also have the potential to earn higher returns over time.
What Makes a Good Investment Strategy?
The best investment strategy is one that suits you, your lifestyle, and your circumstances. We all have different goals, investment timeframes, and times of life when we need to access our money. You may not be able to use what works for someone else.
Your first step is to work out what you want to achieve. Then look at the options available to help you get there. The most important thing is to start investing as soon as possible. Time really is money when it comes to investments – the sooner you put your money in, the better chance you’ll have of building a tidy sum over time.
Create an investment strategy with these steps:
1) Know your investing style. Will you do it yourself, or will you hand it off to a professional? If you invest on your own, how much time will you have to devote to research and monitoring? What’s your comfort level with risk?
2) Identify your investing goals. When do you want to retire? What will your expenses be when you’re retired? Do you want to pay for college? When does that need to happen? Your answers will help determine how much money is needed and when it’s needed.
3) Choose an asset allocation strategy. You can create a portfolio based on how much risk makes sense for your situation—your time horizon, goals, and comfort level with risk.