Sample Investment Strategy

In every game, you need to have a good strategy to win. The same also applies in stock investing. A good strategy when well implemented always assures a win or profit in the investment. If you are planning to make an investment you must at least have a strong strategy to use. If you do not have yet you can start making it now before you delve into a risky investment. You can ask for advise from other investors or you can search the net for a sample investment strategy that you can use or at least analyze. You can review this sample and learn how it works and how it was made so you can also make your own based from the sample.

There are several websites in the Internet where you can get a sample investment strategy. Most of these sites offer different types of strategies that were proven effective in some types of investments. You can search for the one that is fitted to work on the type of investment that you will make. Almost all of the strategies that were used by successful investors are available on the net. You just have to patiently search for the right strategy for you and your business. You can check the reviews about those strategies to know the possible results or problems that you may encounter when using that strategy. It is wise to listen from the ones who have used it.

Making you own strategy is a tricky task. You have to think of several things such as the type of your investment, the duration of your plan, the advantages of your strategy, the risk of your investment and how you are going to treat it, etc. This work can be simplified if you are going to use a sample investment strategy that will serve as your guide. You don’t have to go deep into thinking of what your strategy will do for you. You don’t have to do a series of trial and error experiments to get the best out of your prepared strategy. The Internet has it all and all you have to do is use it in the actual investment as if you are not new to the stock market.

When getting into an investment you must not rely to only one strategy. You might use at least two strategies. You should have a backup strategy if ever your first strategy fails or won’t give you the result that you wanted. Drafting out two strategies means you have to use another sample aside from the first sample investment strategy that you have used. Once you have them all you can face the challenges and the risks that your investment might have. Just be confident and use your strategy according to your plan.

Having an Active Investment Strategy

More and more investors are realising the dangers of not having an active investment strategy. So many investment and retirements accounts were wiped out by the stock market crashes of 1987, 2010 and 2011, and even 90% of mutual funds (which are supposed to be well managed, safe investment vehicles) were badly affected by the market downturns. The average inflation rate in the USA in 2012 is 2.3%, but the best savings account yields, at most, 1% returns. This means that you are losing money when you simply place your investments in a simple savings account, although not as much as if you had employed a ‘buy and hold’ strategy in the stock market. Even investing in ‘safe, blue chip’ high dividend stocks can have sting in the tail, especially considering that dividend earnings may subject to taxation. So, how can you develop your own investment plan?

Steps to a Your Own Investing Plan

Work actively with an investment broker (not a fund manager) – listen to his recommendations, but actively do your own research. Remember that brokers often receive incentives to ‘pump’ certain stocks, so it pays to get your own information. Find out how to understand fundamental details of a company, and learn to understand important terms such as PE ratio. Have a list of questions to ask your broker, and never allow him to push you into a stock that you are not completely comfortable with.

Open your own investment account with an online broker – this is a great way to manage your own portfolio, and the brokerage fees are the cheapest. However, it is really important that you pay attention to diversification. Spread your investment over several sectors and different investment vehicles, so that if one crashes, you are protected in other sectors. Put some money in growth funds, some in growth stocks, some in high dividend stocks, some in REITs and some in safe bonds or treasuries.

Build up an investment plan, which you have paper traded and refined. This plan is very important, must be well thought out, and must have different rules for different strategies. Above all, stick with your plan! Do not trade with your emotions!

Some Investment Strategies to Consider

Momentum Trading – learn the simple skill of identifying a trend in the market, and use a swing trading strategy, or a momentum strategy, to get the most out of the market direction. You may consider using DITM (Deep-in-the-money) option strategies in order to give your investment some safe leverage, without increasing your risk.

Use Option Strategies to reduce the cost of your investment, and to lower your risk of loss. A covered call strategy is perfect for this, in that you can protect your investment from heavy losses, and simultaneously recover some of your investment over time.

Option strategies – there are relatively simple, lower risk option strategies that allow you to take advantage of market trends without exposing your funds to danger. For examples, selling credit spreads allows you to take advantage of both upwards and downwards trend in a market.