Investment Strategies - Scheme Or Superstition?

Investment strategies are many and varied, and with advocates for each one

, it is sometimes difficult to find the right one. An investment strategy is a governing set of rules that guide a particular investor's portfolio so as to maximize gains or minimize risks. There is no perfect set of rules, and picking a strategy depends largely on personal choice and intuition.

More or less, there are two basic types of strategies. They are the Passive and Active investment strategies. The first of these; also called Passive investing, is most common in equity and mutual fund markets. It is based on the belief that over time, despite fluctuations, if you hold on to your shares; you will make a profit. Warren Buffet is probably the most famous advocate of the 'Buy and Hold' strategy, choosing to invest in small time businesses and gain money as they increase. The passive strategy is undoubtedly the safer of these two methods and is beginning to gain popularity in other markets such as commodities and bonds.

The second basic type is called Active investing; in which stock is bought low and sold when it has been thought to have peaked. The basic theory is 'buy low, sell high'. How well the 'day trader' theory works out depends a lot on how skilled the research staff and manager are; because an unsound theory or method followed may cause serious financial loss. Active investors are more prone to panic at market fluctuations and dump shares, which if widespread can cause recessions and economic crises.

It is worthwhile to note that these are only the two basic types; there are many different variations as well as different theories and formulae to predict market trends. None of these are 100% accurate, and some of them are a little better than coin tossing or superstitions. When investing, it is important to evaluate your own finances and assets, judge how much risk you are willing to take, find an experienced and capable manager and spread your investments to minimize serious financial loss. If you find a strategy that works for you; stick to it. Market analysts say that most investors face loss because they switch portfolios or investments too quickly to realize any gain. Even the best strategy is subject to considerable risk, and it is important to have all documents properly explained to you before you create an investment portfolio.

by: Cedric Welsch

POST COMMENT

Uk Property Investment The Best Area In Hull For An Investment Property: HU5, HU9 or HU17? Small Investments That Give Way To Huge Gains Investment in Belize: Ways on How You Can Take Advantage of the Opportunities Volkwagen to make bulky investment of 51. 6 Billion in 5 years Responsible Entities For Managed Investment Schemes Investment Advice - Beating The Low Return Blues What is Foreign Currency Investment? Move Quickly When Rehabbing Investment Property Are Epoxy Floors Worth the Investment? Is the EB-5 investment visa both a good method to obtain permanent residency in the USA and a good investment? Fixed Deposit Offers Safe Investment Avenue. Increase Investment Opportunities With Buyers Agents