A value investing strategy involves buying shares of companies that are undervalued. The idea is to hold onto these stocks as the revenue and earnings climb, and to earn a handsome return when you sell. The strategy is often based on analyzing financial statements and valuation to decide on the value of a stock.
Another example of an investment strategy involves getting involved in the business, such as flipping houses on HGTV. It involves managing a stock portfolio yourself, and can be ideal for someone who likes to be hands-on with their finances. However, it’s best to review and reevaluate your investment strategy periodically, as your goals change.
Another strategy is dividend income investing. This strategy focuses on generating cash income from stocks rather than increasing the value of the portfolio. This approach can involve investing in fixed interest bonds or stocks to earn dividends. It’s a good option for investors who want to receive a stable income from their investments, but doesn’t necessarily need to grow their portfolio.
Having an investment strategy that is geared towards your goals can help you stay disciplined and avoid making mistakes. For example, you may choose to buy all growth funds in your early career, but in later years, you may choose a more balanced mix of growth funds, value funds, bonds, and cash. By diversifying your investments, you’ll reduce the risk and maximize your returns.