Investing can seem overwhelming especially if you’ve never done it before. We think working with a financial advisor who can help you outline a customized investment plan will better position you toward accomplishing your goals. Making sure the plan prioritizes your interests and managing your money in a way that is in line with your objectives is key.
What is an Investment Strategy?
An investment strategy is a set of rules or principles investors use to direct their investing choices. These methods can be based on a range of factors, including risk tolerance, investing objectives, market patterns, and more. By giving your investments a structure, an investment strategy helps enable you to make wise investment choices.
There are two main types of investment strategies: active and passive. Active investment strategies involve active trading and management of investments in an attempt to beat the market. Passive investment strategies, on the other hand, involve investing in a diversified portfolio of assets that track a specific market index. The idea behind passive investment strategies is to obtain market returns without trying to outperform the market.
Types of Investment Strategies
Growth Investing
Growth investing is an investment strategy that focuses on investing in companies that have the potential for above-average growth. Growth investors look for companies that are experiencing rapid growth in revenue and earnings.
Value Investing
Value investing entails investing in companies that are undervalued by the market. Investors who use this strategy are frequently willing to take on more risk in exchange for higher potential returns.
Income Investing
Income investing involves investing in assets that generate a regular income. Investors who use this strategy are often looking for a steady stream of income to supplement their other sources of income.
How to Get Started
Define Your Investment Goals
Before you start investing, it’s essential to define your investment goals. What do you want to accomplish with your investments? Do you want to save for retirement, buy a house, or fund your children’s education? Once you have defined your investment goals, you can start developing an investment strategy that aligns with your goals.
Determine Your Risk Tolerance
Your risk tolerance is the amount of risk you are comfortable taking on in your investments. Some investors are comfortable taking on more risk in exchange for higher potential returns, while others prefer to take on less risk in exchange for lower potential returns. Determining your risk tolerance is critical to developing an investment strategy that aligns with your goals and comfort level.
Choose Your Investment Strategy
Once you have defined your investment goals and determined your risk tolerance, you can choose the investment strategy that best aligns with your goals and comfort level. Consider the advantages and disadvantages of different investment strategies and choose the one that best suits your needs.
Open an Investment Account
To start investing, you need to open an investment account. There are several types of investment accounts, such as individual retirement accounts (IRAs), brokerage accounts, and 401(k)s. Choose the type of account that best suits your needs and open an account with a reputable financial institution.
Work with a Financial Advisor
We believe starting to work with a financial advisor as early as possible can help make a significant difference in your investment success.
A financial advisor is legally required to act in your best interests, not theirs. They are also required to disclose any conflicts of interest and ensure their recommendations are suitable for your needs and goals.
If you are looking for a financial advisor, look no further! At Cold Harbor Financial, our mission is to address not only retirement but every aspect of your financial life. Our team has been providing professional guidance and personal client service to individuals and institutions since 1990.
Schedule a consultation with us today to get started on your investment journey!
Opinions expressed in the attached article are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.
All investments are subject to risk, including loss. There is no assurance that any investment strategy will be successful. Asset allocation and diversification does not ensure a profit or protect against a loss. It is important to review the investment objectives, risk tolerance, tax objectives and liquidity needs before choosing an investment style or manager.
