Are you a private investor looking for a lucrative investment? Then there are various options open to you. You should definitely take advantage of them, because wealth accumulation works most effectively by saving money and limiting yourself massively or by investing cleverly. The latter option offers you far more opportunities. You just need to find the right investment strategy.
Investment strategy is how you allocate your money to achieve your financial Achieve goals. The focus here is on asset accumulation. There are different paths that lead to success. Not every investment strategy is suitable for everyone, because the time horizon and risk tolerance are subject to individual requirements.
There are high-risk forms of investment and those that are relatively safe. Of course, inflation ensures that the money in a savings account also loses purchasing power, but there are other dangers lurking. For example, if you invest in shares of a single company, you risk the total loss of your money in extreme cases. This is the case, for example, when a stock corporation incurs heavy losses. That's why you should watch out for Diversification put
Diversification means the spreading of money. You invest your money in such a way that you divide it among different types of investments or companies. If one type of investment falters, then you have other investments as security. So you never lose everything, but in the worst case you only suffer partial losses.
If you're smart, you spread your capital as widely as possible and invest in different sectors or in different countries. Or you can choose the right mix of shares, fixed-term deposits and ETFs. In other words, you opt for a balanced investment strategy.
If you bet a lot of money on the right horse, you can win a lot. If the horse gallops too slowly, it loses the race and the bets go down the drain. You must therefore always weigh up what is more important to you: high chances of winning and a correspondingly high risk, or a safe form of investment that yields less. A time deposit account, for example, is safer but less profitable. If your investment strategy is based on shares and funds, then the prospects of rich profits increase. However, you also accept a significantly higher risk.
The investment period also plays a major role. During the term of the investment, the money is not available to you. That's why it's best to keep at least two to three months' salary in a savings account or a call money account as collateral. This way, you can always fall back on freely available cash if necessary.
If you own stocks, it is possible to sell them daily. However, long-term investments reduce the risk. A long-term time horizon is also advantageous for equity funds. It is best to hold the fund for at least five to ten years. You also sell fixed-interest securities on each trading day. Ideally, you should orient yourself to the term of the securities.
For a standard certificate, a term of twelve to 18 months is common. In the case of time deposits, you decide on the respective term yourself. Here, too, it makes sense to diversify so that you have both long-term and short-term investments with different maturities.
Portfolio management and the choice of the right investment strategies determine the profitability of your capital investment. The portfolio is a combination of different investment opportunities. In some cases, the characteristics of the investment strategies overlap, which sometimes makes it difficult to clearly distinguish them.
The buy-and-hold strategy is based on a long-term investment. This extends over a period of five to over 20 years. When you apply this strategy, you take short-term price fluctuations for granted and do not choose the best time to buy and sell securities. You hold on to your investment over a longer period of time, regardless of the economic situation.
If a share loses value and the forecasts of the experts are rather bad, then your time has come. You buy the shares cheaply and sell them on more expensively in the event of a price increase. This investment strategy is right for you if you like to speculate. Whether and how the share will develop in the long term is difficult to estimate.
You specifically buy shares of companies that are in an uptrend and are likely to continue to be in an uptrend in the near future. Momentum strategy is another name for this method, because you orient yourself to the current situation. It is also typical to exchange stocks on a regular basis.
In this case, you invest in shares of companies that are behind successful large companies are only second-tier and therefore often attract little attention from investors. Nevertheless, it is possible that these shares outperform the prices from the first row and that the second-tier stocks prove to be lucrative. This example shows that you don't always have to bet on the biggest companies.
The growth strategy is based on the expected growth of a stock corporation or a company. You also take into account companies that are currently not particularly successful. These are, for example, young companies in the energy, software and biotechnology sectors. The financial risk is high, because not all start-ups make it to the top. But if they get off to a flying start, you can reap huge profits.
Value investing is similar to the growth method. However, here you do not orientate yourself on the stock market data, but rather you check the Potential of the respective company with regard to a future increase in value. You analyze the market environment and business data. For this you need extensive market knowledge and a lot of experience.
With the index investment strategy, you do not bet on individual stocks. Instead, you consider the entire stock index, for example the Dow Jones or DAX. The return is based on the performance of the index you have selected. You invest in passive funds, which are called "ETFs" in technical language. The investment strategy is relatively low-risk.
With this investment strategy, you focus on the dividend, which you regularly receive in the form of a profit share in a company. The share price plays less of a role here. It is best to choose shares in reputable companies that have been operating successfully on the market for a very long time and pay out dividends reliably. If you choose the dividend growth strategy, you are speculating on a continuous increase in payments.
When you choose the size strategy, you give big companies more Trust. You then assume that the shares of a large company are only subject to minor price fluctuations and hope for a stable and safe investment.
In addition to the investment strategies mentioned above, there are other methods to increase profitability and generate attractive profits. For example, some investors invest specifically in smaller companies, in start-ups or in emerging markets. Sustainable investment strategies, which deliberately allocate money to environmentally friendly activities, are also currently very trendy. In addition, the use of multiple investment strategies is possible.
The classic is the savings book. Call money and fixed-term deposit accounts as well as home savings contracts are also still in vogue. However, these forms of investment are becoming less and less worthwhile due to the continuing low interest rates.
There are also other interesting options, such as bonds and shares. When you buy shares, you acquire a stake in a listed company. The more successful the company is, the more your shares are worth. Mutual funds include the shares of several providers.
ETFs are exchange-traded funds that are widely diversified and therefore carry a lower risk. It is also possible to purchase cryptocurrencies. This is also a price-dependent form of investment.
It is also possible to invest in tangible assets. Precious metals, such as gold, are still considered a relatively safe investment. Real estate is also generally stable in value. If you invest your money in owner-occupied real estate, you secure part of your livelihood in the long term. But rented properties often also offer a high return.
Before you choose one of the investment strategies, you need to know what you want in the first place. Therefore, ask yourself some questions.
Do you accept the full risk for more profit or do you want maximum security and settle for a smaller return? happy? In addition, the personal life situation plays a role. Does the financial framework fit your project? Do you have children whom you want to support financially if necessary?
Are your ideas realistic? Do you plan to invest smaller amounts over a period of time or do you plan to invest a larger sum right away? Are you really able to do without money over a longer period of time? Think carefully about what you can do without. Do you take care of the investment yourself or do you leave it to someone else? Financial experts?
Self-reflection helps you find the right investment strategies. Think about your personal financial goals. Of course, financial advice from an expert brings clear benefits; after all, this is a complex and very important topic.
It is quite normal for a beginner to be confused by the numerous investment strategies and forms of investment. Most shareholders and investors are professionals who know exactly what they are doing. You, too, can grow through ongoing learning and the right education. Finally, take charge of your own finances and realize your full potential.
