If you are just starting to dip your toes into investing, you may be wondering: where should you begin? You can start by asking yourself a few questions: What are your investment goals? How long do you plan to achieve these goals? How much risk are you willing to take? And, if stocks plummet, how much loss can you withstand without panicking?
Everyone’s answers are different. However, these questions can help you pinpoint an investment strategy that suits you best.
An investment strategy is a set of rules and principles that determine how you approach investing. It influences the types of investments you choose and how you allocate your assets, such as the proportion of stocks, bonds, and other securities in your portfolio.
There are many different investment strategies, and no one strategy fits all. Here are some of the primary investment strategies that experts have been using for years.
The “buy and hold” strategy involves selecting investments that you believe will perform well in the long run and holding onto them for an extended period, even when the market experiences temporary downturns.
However, to execute this strategy successfully, you need to thoroughly analyze the stocks you are buying, including their past performance, earnings, debt levels, etc.
This strategy can also be applied to index funds, which track diversified funds like the S&P 500.
“Value investing” entails identifying undervalued stocks – those whose current prices are lower than their intrinsic values.
You need to conduct thorough research on companies and markets to identify stocks with significant potential. This approach is akin to finding bargains – buying low-priced stocks now and waiting for them to appreciate in the future. It bears some resemblance to the “buy and hold” strategy.
“Active investing” differs significantly from “buy and hold.” It involves frequent buying and selling of stocks to achieve higher returns and outperform the market. This requires meticulous technical analysis, research, timing, and entails higher risks.
Since active investing involves extensive research and analysis, its costs are typically higher.
“Passive investing” is the antithesis of active investing. It doesn’t aim to beat the market; rather, it follows the performance of broad market indices.
You can achieve this through investing in index funds, which can be mutual funds or exchange-traded funds (ETFs) that track market indices like the S&P 500.
You can diversify your investments by using different types of index funds. The benefit is that they offer broad investment exposure, investing in various stocks and bonds, and are managed by professionals.
There are numerous online tools available now to help you tailor your asset allocation and fill in with respective index funds.
“Growth investing” involves investing in rapidly growing companies that you believe will advance quickly. In the past, technology and aerospace companies often fell into this investment category.
Sometimes you come across a company that launches unique new products or technology that competitors find challenging to replicate. For instance, Amazon, despite its size, continues to be profitable, innovate, and develop services like cloud computing and artificial intelligence, making investors consider it a growth stock.
“Income investing” aims to acquire stable and reliable income.
Many retirees adopt this strategy to use investment income to cover daily expenses.
This strategy typically favors conservative investments such as bonds, bond funds, government securities, and dividend-paying stocks.
Investing is both complex and exciting. However, once you find a strategy that suits you, it becomes less daunting. You can choose from value investing, growth investing, income investing, among various strategies. Ultimately, it depends on which strategy aligns best with your financial goals, time frame, and risk tolerance.
(The Epoch Times © 2025. This article reflects the author’s views and opinions, and is intended for general informational purposes only, without any recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, real estate planning, or other personal financial advice. The Epoch Times does not guarantee the accuracy or timeliness of the article content.)
Author Bio:
Javier Simon is a freelance personal finance writer for The Epoch Times. He focuses on retirement planning, investments, taxes, financial technology, financial products, and more. His articles have been featured in several major publications, including Fox Business, The Motley Fool, NerdWallet, and Money Magazine.