Financial Investment Strategies –
Know The Strategies And
investment strategies – you need to understand the strategies and the risks
before you investment your money.
really need to do a lot of reading and research before you plan to investment
your money anywhere. There is no “one size fits all” investment plan and each
investment approach has its own merits.
want to safeguard your investment as fas as possible by understanding the
different types of investment strategies and their accompanying risks.
also need to consider which investment strategy fits you financial needs and
situation the best and which strategy you are more comfortable with as a
Financial Investment Strategies
Income Investment Strategy
tends to be viewed as a more conservative approach to investing money.
primary focus in this type of investing is to investing your money in larger
companies that historically create significant profits.
this approach you would aim to make your money by investing in companies that
show a high dividend yield, ongoing and increasingly growth focused
dividend yields and companies that show high growths and earnings growth
- In this approach, you would aim to invest your money in
stocks have the potential to
grow in the future.
- There is a shift away from looking at the current price to
looking instead towards the likely growth of the stocks in the future.
- One of the potential down sides is the investment risk that
a fledgling company may not grow as quickly or consistently as initially
- In this approach you need to look for stocks that historically
show robust earnings growth; favourable potential in the future for growth in
earnings and costs that remain relatively stable in comparison to the income
- You approach here would be to aim at buying stocks in
quality businesses and companies at lower or discounted prices.
- You will need to understand the inherent value of the business and then buy stocks in that business
when the prices are below the inherent value.
- The ups and downs in day to day prices are of negligible
importance as you aim that the long-term return on your investment.
- A guideline would be to buy shares in a credible company
that are no more than two thirds of the inherent value of the company.
- The P:e ratios should be within the lowest 10% of the
What are Investment Risks?
- Your investment risk is an indication of the potential for
you to lose some of your investment.
- It is also an indication of the potential for you not to
make as much money from your investment as you thought you would make when you
invested your money.
What are the Primary
Types of Risks?
- Inflation risk – the value of your investment can be eaten
away by a high inflation environment.
- Interest rate risk – the chance that your investment can be
minimized by an unforseen change brought on by lower interest rates.
- Market risk – your investment may be influenced by an event
that impacts on the market collectively as a whole.
- Liquidity risk – the chance that it will be difficult for
you, to either buy or sell a certain type of investment quickly, because there
is not enough of the investment at that particular time.
- Some investment classes have a lower risk and generally a
lower return on your investments – money markets, bonds and exchange traded
- Some investment classes have a higher risk and generally a
higher return on your investments –shares, derivatives and corporate bonds.
Make sure you understand the risks and the investment
approaches before you invest your money.
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