Investment Strategies

An investor leans back in his chair with a grin running all the way across his face. You just know that this investor has successfully executed an investing strategy. There is literally nothing more rewarding to someone in the investing business than to have a trade work perfectly. When you understand that you had a strategy behind what you just did, that is even better. Different strategies work for various traders, so it is important to review what some of these techniques are. 

Asset protection 

Some investors are simply looking for a way to protect the wealth that they have already generated. These investors are typically those who are in or near retirement. They just want to be able to keep their minds off the stock market and on their beach homes and summer vacations. To them, it is best to protect the wealth that they have already generated in order to be able to live off of that money. In order to help make this a reality, users of an asset protection strategy should try to purchase conservative investments. Having most of their money in highly graded bonds is not a bad idea. These bonds are considered to be among the safest of all bond investments. They provide a predetermined amount of interest to the bondholder at a predetermined time interval. Thus, you could easily be able to have some very safe and profitable investments in these kinds of bonds. If you are interested in even more security for your investment, then you might think about investing in US treasury bonds. These are bonds from the government. They are even safer than corporate bonds because the government always pays back on its bonds. If it did not, then the country would be in default. This means you can guarantee your return in this manner. The interest rate paid on treasury bonds will be slightly lower than that of the high grade bonds. Finally, if you are really interested in asset protection, then you will just place as much money as possible into that savings account you have. Piling money into the local bank may not sound like much fun, but this is still technically a form of investing. Savings accounts at banks do pay a very small yearly interest rate. If you have a significant amount of money in savings, then you might be able to generate at least a little supplemental income. It is probably a good idea to use a free savings account comparison website like to find the best interest rates available. Just don’t count on your savings bringing you a fortune. 

Capital appreciation 

Lets be honest, asset protection is a strategy that is a bit bland and boring. After all, you dream of driving a Ferrari, not a Cadillac. In order to make the big money in the first place, you are going to need to take some risks. Someone using a capital appreciation strategy is not going to be afraid to put their money to work in stocks and mutual funds. They are still going to use diversification to manage risk, but they are not going to watch painfully as their savings account grows by just 0.5% per year. For those using a capital appreciation strategy, putting money to work in stocks that pay dividends is a smart choice. These are stocks that pay out a small amount of money each quarter to loyal shareholders. Those shareholders are welcome to receive their payment in the form of a check, or they may opt to have their dividends turned into more shares of the stock. This means that your investment would be growing on itself. Continue adding money to those investments over time, and you can see how a snowball effect would take place. Money growing on itself is, in essence, the entire point of a capital appreciation strategy. This is also the strategy that is probably the most appropriate for the majority of investors. 

Pure speculation

The daredevil in all of us is likely to want to push for an even more aggressive strategy than capital appreciation. Some people get more satisfaction out of the fact that they can brag about their investment picks than they get out of the profits they make. This desire to have something to brag about brings many people to take on more risk than they ever should. Using a strategy of pure speculation is something that should only be attempted by those who are using it for educational purposes. That is to say that those who are putting their money into the market on a pure speculation basis should treat it as they would with gambling. They should not be afraid to lose every penny that they put into the system if they are going to be this reckless with their investment choices. However, there can be some great lessons about the way that the market operates that are learned through the use of this kind of strategy. 

Your adventure begins

The above were just three out of the limitless number of strategies that one might select to use in the market. It is important to use any strategy that you believe might be most prudent in your particular situation. Hopefully, it will turn out that you are right in your assumptions. Have a look into this today, and see what you are most comfortable with. The market awaits your decisions.