3 Best Investment Strategies to Grow Your Money

3 Best Investment Strategies to Grow Your Money

To grow your money, one of the most frequent ways is by investing it and, to do it well, you will need to have some action plan. Planning the actions to take to achieve the goal of making your money grow is what is known as investment strategy.

Not having a strategy when making your investments will lead you to stumble and move your money based on hunches or unfounded news, and that can lead to failure. Since, to invest, you have to have one or more strategies that ensure you meet your goal of growing your money.

Therefore, we are going to review some of the 3 best investment strategies to make your money grow, because having a mapped route is essential, always.

What is it?

Basically, investment strategies are rules and regulations used to create a portfolio of financial products and operate with them. In other words, investment strategies are procedures and behaviors that guide investors in the appropriate choice of their portfolio of securities.

This portfolio of securities is the combination of financial assets or products in which they expect to invest, and that can be of fixed rent or from variable income.

To build these plans it is essential to be clear about the relationship between risk and return on investment, as well as what type of investor you want to be. Well, there are some investors who seek to maximize the return on their investment through risky assets, while other investors want to reduce the risk of their investment to a minimum.

How to choose one?

There are as many strategies as there are investors in the world. In particular, if one takes into account the variations that each one can introduce in the general methodology.

And since we need guidelines for action in each case, for the different phases of the market where we invest, it is necessary to have an investment plan. So it is essential to be clear about the financial objectives and the investment horizon that you want to achieve in the short and long term, to choose your planning.

Likewise, you must assess the time to dedicate to the investment and the tools that you are going to use, as well as your financial knowledge, to implement the investment strategy that best suits you.

The 3 best investment strategies

To choose an investment strategy it is essential that it adapts to you, your investor profile and the objectives you want to achieve with your money.

Buy long-term stocks

This investment strategy of buy long-term stocks or very long term in the stock market, it is known as buy and hold. And it consists of buying a share and keeping it over time, with the intention of collecting the dividends that are distributed over time.

It is one of the most common investment strategies for new investors, because it is simple and does not require spending many hours a day.

For individual investors, buying stocks for the long term allows them to take advantage of one of the main advantages: time. This same buy and hold strategy can also be applied to investment funds.

Invest in mutual funds

The investment funds They are groups of shares of various companies, which you can acquire with a single purchase, since shares are acquired in hundreds or thousands of different companies.

A fixed or variable income investment fund or index fund is a fund that tries to replicate the behavior of a certain market index. And, when you invest in a fund that tries to outperform its benchmark, you invest in an active fund.

Whereas, if you invest in a fund that copies its benchmark, then you invest in a passive fund.

According to some experts, a portfolio of investment funds that replicates the market index achieves better results with less effort on the part of the investor. Therefore, they advise this strategy of investing in index funds.

Dollar Cost Averaging

The Dollar Cost Averaging (DCA) It is an investment strategy where you place in the markets, periodically, always equal amounts of money, no matter how the markets behave.

In other words, the DCA is based on periodically and constantly investing the same amounts, not everything is invested at once, but little by little. Investing in this way, when the market falls, implies buying more shares, since the price is lower and this has a positive effect on the final profitability of the investment.

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