Although investment profits are not a guarantee, it is much like a chess game. You really don’t know the outcome of the game until the game has been played and the winner has been declared. Anytime you play any type of game, you must have a strategy. Investing your money isn’t any different, you must incorporate an investment strategy
What is an Investment Strategy
Simply put, an investment strategy is a financial plan implemented to invest your money in a variety of ways in various types of investments, in order to meet specified financial goals in a specific time frame.
There are many individual types of investments that you may choose. For instance, the stock market which is a type of investment that contains numerous types of stocks that are a part of different companies in which you can invest.
How To Determine Your Risk Tolerance
If you are brand new to investing, you are going to need some professional help with your investments. Make an appointment with several financial planners and discuss with them what your financial goals are. Choose the financial planner who understands and is willing to listen to you to help you meet your financial goals. Also, check for experience and references when choosing your financial planner.
Investing can become quite confusing if you have not done your research because there are so many types of investments that you can choose. This is where your investment strategy coupled with your investment style emerges.
What Is Your Investment Style?
It is important that you know what your investment style is before you start investing. Determining your investment style will help you understand your risk tolerance. An investment style ties in with your level of risk and there are only three styles to consider, a conservative style, a moderate style and an aggressive style.
It is only natural that if your tolerance for risks are low then you most likely would be a conservative or moderate investor. If you are the betting and risky type then you most likely would be considered an aggressive investor. Whatever your financial goals are will likely determine what style of investing you will use.
Take into consideration what you are investing for. If you are saving for retirement sometime in your future and you are fairly young, invest conservatively. But if you are trying to buy that dream home within the next couple of years then you might need to take a more aggressive approach to investing.
Lastly, you should never invest your money without having a strategy and a goal. This is essentially important. Never give your money to anyone without knowing the basic plans for your money. You must also be proactive in the decision making process of your investments. If you fail to implement a strategy and do not have a goal, you may lose your money and never get it back. Take your time and plan to implement successful investment strategies. Also, set forth goals in order that you may reach your financial destination.