2018 Securities Investment Strategy

People extensively plan for their workday, a vacation, college financing, golf matches, buying a car, but they often forget about the most plan-required task of them all: investing. Investing your money without an investment strategy is like a football team going into a game without a playbook, although they are not required, they significantly improve your chances of winning.

Having an investment strategy is like having an instruction booklet guiding you through the investment process. It will help you discard many potential investments that may perform poorly overtime or that are not right for the investment goals you are looking to achieve.

When creating an investment strategy, it is important to quantitatively figure out what you are seeking to accomplish. Stating that you simply want to make money or become wealthy is not helpful. A better objective would be to say "I want to achieve an 8% average annual return on my investment contributions over the next 10 years.

Types of Investment Strategies

Value Investing

An investment strategy made popular by Warren Buffet, the principle behind value investing is simple: buy stocks that are cheaper than they should be. Finding stocks that are underpriced takes a lot of research on the fundamentals of the underlying companies. And once you've found them, it often takes a long time for their price to rise. This buy and hold technique requires a patient investor but should the right call be made, handsome payoffs could be earned.

Income Investing

A great way to build wealth over time, income investing involves buying securities that generally pay out returns on a steady schedule. Bonds are the best known type of fixed income security, but the category also includes stocks, exchange-traded funds (ETFs), mutual funds, and real estate investment trusts (REITs). Fixed income investments provide a reliable income stream with minimal risk and depending on the risk the investor is looking to take, should comprise at least a small portion of every investment strategy.

Growth Investing

An investment strategy that focuses on capital appreciation. Growth investors look for companies that exhibit signs of above-average growth, through revenues and profits, even if the share price appears expensive in terms of metrics such as price-to-earnings or price-to-book ratios. What Warren Buffet did for value investing, Peter Lynch did for growth investing. A relatively riskier strategy, growth investing involves investing in smaller companies that have high potential for growth, blue chips and emerging markets.

Small Cap Investing

An investment strategy fit for those looking to take on a little more risk in their portfolio. Small Cap stocks are appealing to investors due to their ability to go unnoticed. Small cap stocks tend to have less attention on them because: a) investors stay away from their riskiness and b) institutional investors (like mutual funds) have restrictions when it comes to investing in small cap companies. Small cap investing should only be used by more experienced stock investors as they are more volatile and therefore difficult to trade.

Socially Responsible Investing

A portfolio built of environmentally and socially friendly companies while staying competitive alongside other kinds of securities in a typical market environment. In today's modern world, investors and the general public expect companies to maintain some social conscience, and they're putting their money where their mouth is.