How to create an investment strategy?

Yes, investing can deliver great returns. But only when you can put your money to work and potentially build wealth. Smart investment strategies always help outpace inflation and increase your funds over time. So, investors must realise the power of compounding money and diversifying assets to maximise the growth of investments.

Investment Strategies Meaning

An investment strategy is all about efficiently managing your finances. As an investor, you must choose a plan that adheres to your financial schedule and suits your risk tolerance level.

The financial objective must be clear and precise and explain the investment’s purpose and goal. Additionally, other factors like level of income and capital growth are considered imperative to framing investment goals and strategies.

Types of Investment Strategy

Before choosing your ideal investment strategy, let’s check the different types of market investment strategies:

• Short-Term Investment Strategy: Short-term investment strategies provide results in a short duration, ranging from one to three years. People prefer short-term investment plans because they can potentially yield more profits than comprehensive investment strategies. However, this strategy also involves higher risks.

• Long-Term Investment Strategy: Rental real estate, stocks, mutual funds, and gold are types of investment strategies categorised under long-term. Most people prefer long-term investment plans because they involve lower risk and higher returns than other investment plans.

• Active Investment Strategies: Active investment strategies need the active involvement of investors. Here, the investors have complete control over their portfolios and don’t have to depend on their financial institution or advisors all the time.

• Passive Investment Strategies: REITs, rental properties, or index funds are investment strategy examples to be considered for passive investments. Investors are not actively involved in these investment processes. All they have to do is invest and let their assets generate profits.

• High-risk Investment Strategies: High-risk investment strategies in India involves a higher risk of profit and loss in investment planning. Investing in startups or “playing” the stock market are some high-risk investment strategies to avoid until you are an experienced professional investor.

• Low-risk investment strategies: Purchasing bonds, cash deposits, and savings accounts are low-risk plans where a single investment is divided into minor investments. This way, the risk of loss is reduced, and investors can safeguard their money like a professional.

SIPs and mutual funds are some high-return investments in India with lower risk margins.

Developing an Investment Strategy

Your strategy of investment is what sets you apart from other investors. That is why it is important to draft a lucrative investment plan with nominal risks. Below are some key points that can help you get the perfect investment plan.

• Select a Timeframe: Before crafting an investment strategy, you must decide a timeframe to keep your funds invested. Determine whether you have a long-term or a short-term plan, then invest accordingly.

• Diversify your assets: Diversify your investments among different classes. Experts advise this to minimise the risks by curbing the exposure to a particular asset class. If any assets underperform, you will have others as a backup to prevent the loss.

• Risk-management plans are a must: You should be able to identify the risks involved in your investment strategy. This is one of the best qualities of a good investor and will help you gain profits in the long run.

• Do your research: To ensure secured returns, extensive research on your investment plan and strategies is vital. Numerous companies can design a market investment strategy to provide greater returns to investors. You must find the one that suits you the best and invest accordingly.

Conclusion

It is common for people to invest mindlessly in most stocks and then regret it later. A perfect investment strategy is a key to generating profits through stock investments and trading. So if you are ready to start your investing journey, visit Kuvera, your safe space to invest. Kuvera will serve as an investment adviser that provides online personal financial services that help beginners to make their investment decisions dynamically.