Common investment strategies to balance your needs

Aminah and Saeed want to buy assets and forget about them, as opposed to their friends, who want to track prices and take advantage of market fluctuations. Both these are investment strategies. Your investment strategy is your guide on how to balance your requirements with your goals and timelines to achieve the best results. What works for one investor may not be suited to another. An investor with an updated strategy is well prepared to take investment decisions when needed.

Common investment strategies include:

Buy and hold
Categorized under passive investments, this strategy takes advantage of time, compounding, and undervalued assets to maximize returns simply by holding on to an asset. It can be employed for multiple types of assets.

Investors may opt for assets they believe are undervalued with a high potential for growth. This requires investing time and analyzing assets thoroughly. Investors may also hold the asset for the long term and let compounding and appreciation do their job. This requires patience and emotional stability to stay the course and not be swayed by market fluctuations.

Dollar-cost averaging

In this strategy, investors gain by consistency. You invest the same amount of money in a particular investment – whether it is shares, ETFs, or managed funds – at set intervals, regardless of market fluctuations.

The investor gains because regular, consistent investment means you would invest at various price points, whether the market goes up or down. When the prices are low, you get more of the same asset, and when they are higher, you get a lesser amount. Rather than trying to time the market, which means losing opportunities due to many factors, this strategy relies on consistency in investment behavior.

Income versus growth

Income versus growth investing suits different types of investors. Growth investing is an active investment strategy, which involves experienced investors with a high risk tolerance to enter and exit the investment based on market fluctuation.

On the other hand, income investing relies on dividend payouts to ensure regular income. Investors seeking income typically opt for companies with consistent dividend-paying records. Some may opt to reinvest the income into more of the asset itself. However, they still prefer the steadiness and lower risk associated with this investing.

An investment strategy starts with having clarity on your goals, so the investments can be matched to your requirement.