Basic Investment Strategies


If you are thinking of investing and are confused about the best strategy for you, then we’ve got you covered in this post. So, here are 3 basic strategies for investing:

1. Momentum Investing (aka Day Trading)

This type of investment is looking at the activity around a company. It is normally associated with what we see on TV and in movies as frantic buying and selling. You do not need to run at the pace that the market wants you to run.

Rather, take on a broader approach and look at stocks that are doing well. Once you’ve identified it, look at the potential demand that may be coming in 3 to 6 months’ time. Timing is very important if this is the strategy that you go for.

2. Value Investing

This investment strategy is about the price you pay for the company.

Value investing is the practice of purchasing stocks that are trading for less than their intrinsic value. The idea is to buy the stock when the price is temporarily low and realize gains when it recovers.

Value investing can be more casually described as buying stocks on sale.

3. Growth Investing

The company’s future prospects and how the company is growing over the years.

Growth investing is investing in stocks of companies with good future growth potential, usually in any rapidly expanding sector. These companies have a better capacity to increase their profits and are in a better position to survive the competition.

If the business strategy is strong, growth investing stocks show a sudden rise in price within a limited time span. Companies with good growth potential will have relatively higher earnings per share (EPS) and also a higher price-earning ratio (P/E ratio) compared to their competitors.

An example of growth investing is investing in real estate.

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