How To Choose The Best Investment Strategy

By Don Meyer

 The income that we have all been receiving from our savings has been dwindling dramatically over recent years, so if we are to be able to make any sort of return on our money then choosing the best investment strategy is absolutely vital to achieving our financial goals. Inflation is one of the key drivers in needing to plan this strategy, as most savings accounts at the moment are paying interest below the rate of inflation, which leads to the capital effectively decreasing in value.

There are many reasons why you need to be considering your strategy to investing as a whole, because by looking at your investments individually could leave you vulnerable if you are over-committed to one sector or one type of investment. You also need to be certain of how long you are planning to keep your money in the investments, so that you can tailor the risks you take so as to remain able to achieve your goals. There really are very many things to be considered choosing the best investment strategy.

One of the common investment strategies if you are looking to earn a regular income from your investments is to stick mainly to those stocks which have a proven track record of paying out reasonable dividend payments from their profits year after year, and focus on that income, rather than in the temporary fluctuations of the market. If you think that this is the best investment strategy for you, but don’t require the regular income, then many funds will allow you to re-invest any dividends into the same shares to grow your capital invested.

If, however, you are looking to make swifter and more dramatic gains in the value of your investment, then you may need to look at taking more risk. The key with looking for these is that there is greater possibility of actually losing your capital. Investing in the stocks directly can be particularly risky, but there are also funds which you can use to invest and spread the risk for you. The fields most likely to achieve result if you think this is the best investment strategy are the smaller companies and emerging markets.

You can also consider looking at investing in the bond market, with many large companies having issued bonds in the aftermath of the credit crisis, but it is generally considered that most of these bonds are close to the top of their value at the moment, so now may not be the right time for this.
Ultimately, getting the best out of your investments will depend on what you are looking to achieve, and choosing an investment strategy to match.

Article Source: http://www.streetarticles.com/stocks/how-to-choose-the-best-investment-strategy