The 4 main investing strategies

Theres many different strategies out there when it comes to investing but lets go over the 4 main ones. You should always have some sort of strategy or goal in mine with investing as these will guide your investment portfolio. We will also chat about how you can decide what your strategy should be!

Right lets start with the first investing strategy!

But first.... I am not a qualified financial advisor and this is for education/entertainment purposes only. You should always do your research before deciding what to do with your money.

Strategy 1 is called 'Growth Investing'. This strategy is all about growing your money as the name gives away. Growth investors usually prioritise investing in small start up companies in rapidly growing industries. I guess the aim for this is to find the next big thing that is going to blow up! This is because these are the companies whose growths will be the largest should it take off - much much larger than established companies. Growth investing tends to be more aggressive and short term. This means theres often lots of money to be earned (high returns) here... of course providing these start ups do well! This investment strategy is pretty risky - I mean quite often the riskier investments have the highest returns but of course you need to be willing and able to lose all the money you place into any investments. Obviously to rely on growth investing you need to know which companies to invest in so there needs to be a lot of knowledge and a willingness to take risk.

Strategy 2 is going to be the complete opposite of strategy of growth investing and that is Value Investing. Value investors would look for stocks that they believe to be undervalued as these will then go onto give a great return. So to simplify, this strategy is about buying stocks that are cheap (when they shouldn't be) and holding them stocks until the market increases and the stock prices go up. Unlike growth investing, value investing tends to be the slow and steady approach to investing so those who want long term growth as their aim. Value investors tend to be less interested in the potential upcoming companies but rather the more stable and established companies.

Strategy 3 is called Momentum Investing. This strategy involves strategically buying into the market when prices are optimal and then selling the investment and exiting the market when prices have peaked. This means learning and following different indicators as to when the time to enter and exist is - this is hard and in my opinion not sustainable. This strategy is not one I've tried but it seems as though you have to put a lot of time and effort into it and be quite emotionless about it.

The final strategy is Dollar-Cost Averaging. This is one I've spoken about a few times before on this channel and is one a lot of people know about or do. This strategy is where you make regular payments into an investment over time for example you put $100 dollars each month into the S&P500. The point of this strategy is to remove any emotions from investing and not trying to time the market at all. The idea is that over time the prices you buy into the market at will average out ie you will buy sometimes when the market is high and sometimes when its lower. This strategy tends to be less risky than the growth and momentum strategies we mentioned.

Your strategy:

Picking your strategy or your combination of strategies is a personal choice. You don't need to follow any of these strategies to a tee of course but it just helps to think about which method would most align with your goals. A general piece of advice for any beginners out there or anyone who's aim and goal is long term investing ie you want to invest and leave your investments to build capital for a long time then your best bet may be to invest in low risk investments that are very passive ie index funds.

Whether you dollar cost average these investments or lump sum invest is up to you. I think sticking to the stuff that has been proven time and time again is always a good option especially if you don't want to put lots of time into learning about different methods. - Go and read about Warren Buffett and his methods!

I hope this helps someone :)

Thank you for reading,

Hayley