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Frugal living and debt reduction tips for a better financial future. This is one family’s story.

August 2nd, 2012

Choosing the Best Investment Strategies

When it comes to growing your wealth, investing is one of the most effective ways to get the job done. Unless you invest, you’re not even going to be able to keep up with the rate of inflation. If you are interested in investing, you can’t just pick any strategy and get to your goals. You have to spend some time to make sure that you pick the best investment strategies along the way.

Here are some of the more popular investment strategies out there for you to choose from:

1. Value Investing

One popular investing strategy is value investing. With value investing, the investor tries to find investment options that are undervalued in the market. For example, the investor would use valuation multiples to figure out which stocks are trading below their value. Then the investor buys the stock and waits for the market to correct itself.

2. Dollar Cost Averaging

Dollar cost averaging is another strategy that many investors use for a long-term method. With dollar cost averaging, the investor chooses a particular investment to keep putting money into over a long period of time.

For example, an investor may decide to put $500 into a particular stock every month. This way, he buys more shares of the stock when the price is low, and fewer shares when the price is high. It helps reduce the risk of putting a large amount of money into a stock all at once.

3. Contrarian Investing

Using a contrarian investing strategy is another popular method that many investors are starting to look at. Warren Buffet is the most prominent investor who uses this strategy. With contrarian investing, you buy a stock when everyone else is dumping it.

When a company gets some bad news, the market often punishes it more than it deserves to be punished. Because of this, it provides a valuable buying opportunity for the investor who purchases the stock at these prices. Then when the company starts to gain value, it will provide even more profit for the investor who decided to buy when the prices were low.

Any of these investment strategies can work under the right circumstances. If you are unfamiliar with investing, you may want to contact an experienced financial advisor likeWalter Wisniewski of Paragon Capital. An advisor will help you make sense of these investment strategies so that you can maximize the performance of your portfolio.

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