In the ever-evolving landscape of investments, achieving consistent and unmatched returns is the ultimate goal of every potential investor. It is a well-known fact that behind the success stories of top-performing best mutual funds lies a tapestry of diverse investment strategies, each woven with unique philosophies and methodologies.
As we delve into the wide era of investment strategies of the current times, we uncover various approaches, each bearing its blend of risk and reward. Understanding these crucial strategies not only paves the way to successful returns but also offers you invaluable insights for investors.
Popular Investment Strategies you cannot avoid
- Top Down Investing
It is basically an investment analysis approach that focuses on the economy’s macro factors. These include the GDP, employment, taxation, etc, before examining micro factors such as certain companies or sectors.
- Bottom-up investing
Bottom-up managers choose certain stocks based on the strength of a company, regardless of what’s happening in the overall economy as a whole or the sector in which that company lies. In simple words, it means focusing on a company’s fundamentals, such as revenue or earnings.
- Contrarian investing
It is an investment style in which investors purposefully go against the current and prevailing market trends by selling when others are purchasing and purchasing when most investors are selling. These types of investors believe that the individuals who claim the market will go up typically do so when they’ve already invested all they can, indicating a hike. On the other hand, when predictions of a downfall, these individuals have likely sold their holdings.
- Dividend Investing
In this type of investing strategy, even if the stock price goes down, you’ll at least get some income. As the term implies, dividend funds buy stocks that carry a strong record of earnings and pay dividends. Because of the stock market volatility, many investors out there like this idea as they avail a regular payout.
(Tip: Always use a SIP Calculator before investing for the best outcome.)
Things to consider when creating an investment strategy
- Choice between active and passive investing
Determining whether to actively participate in daily investment decisions or adopt a passive, long-sighted view is crucial.
- Asset allocation
The distribution of your investments across various asset classes also has a major impact on your overall performance. For instance, an investor focused on bonds will experience different outcomes compared to one entirely focused on stocks.
- Time horizon
The timeframe of any investment strategy holds significant importance. Both the asset managers and individual investors allocate investments based on when they anticipate needing access to their funds.
How do you invest in the best mutual funds? Which is the best platform?
Nowadays, you need not go anywhere while planning to start an investment. It is all about you and your internet-enabled smartphone; you are more than good to go. Recently, when I was planning to invest, I came across an application called ‘Bajaj Finserv’.
Believe me, this is one of the best applications that even offers a mutual fund calculator to plan your investments accordingly. Highly recommended!
Conclusion
Understanding and executing these strategies illuminates paths to success while offering invaluable insights for investors navigating the complexities of the financial sphere. New and potential investors can always learn from this mix, understanding that success needs flexibility and a good plan at all times!
