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Investment strategy

 
Investment Dictionary: Investment Strategy

An investor's plan of attack to guide their investment decisions based on individual goals, risk tolerance and future needs for capital. The components of most investment strategies include asset allocation, buy and sell guidelines, and risk guidelines.

Investopedia Says:
Investment strategies can differ greatly from a rapid growth strategy where an investor focuses on capital appreciation to a safety strategy where the focus is on wealth protection. The most important part of an investment strategy is that it aligns with the individual's goals and is closely followed by the investor.

Related Links:
Setting goals is the first step in determining which investment vehicles are right for you. Investing With A Purpose
Your pals may like your returns, but it isn't wise for you to manage their money. Investing For Friends
You might know about different asset types, but do you know how each type contributes to a particular goal? Basic Investment Objectives
This is a step-by-step approach to determining, achieving and maintaining optimal asset allocation. A Guide To Portfolio Construction
Without this risk-reduction technique, your chance of losses is dangerously, and unnecessarily, high. The Importance Of Diversification


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Financial & Investment Dictionary: Investment Strategy
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Plan to allocate assets among such choices as stocks, bonds, Cash Equivalents, commodities, and real estate. An investment strategy should be formulated based on an investor's outlook on interest rates, inflation, and economic growth, among other factors, and also taking into account the investor's age, tolerance for risk, amount of capital available to invest, and future needs for capital, such as for financing children's college educations or buying a house. An investment adviser will help to devise such a strategy. See also Investment Advisory Service.

Wikipedia: Investment strategy
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In finance, an investment strategy is a set of rules, behaviors or procedures, designed to guide an investor's selection of an investment portfolio. Usually the strategy will be designed around the investor's risk-return tradeoff: some investors will prefer to maximize expected returns by investing in risky assets, others will prefer to minimize risk, but most will select a strategy somewhere in between.

Passive strategies are often used to minimize transaction costs, and active strategies such as market timing are an attempt to maximize returns.

One of the better known investment strategies is buy and hold. Buy and hold is a long term investment strategy, based on the concept that in the long run equity markets give a good rate of return despite periods of volatility or decline. A purely passive variant of this strategy is indexing where an investor buys a small proportion of all the shares in a market index such as the S&P 500, or more likely, in a mutual fund called an index fund or an exchange-traded fund (ETF).

This viewpoint also holds that market timing, that one can enter the market on the lows and sell on the highs, does not work or does not work for small investors, so it is better to simply buy and hold. The smaller, retail investor more typically uses the buy and hold investment strategy in real estate investment where the holding period is typically the lifespan of their mortgage.

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Investment Dictionary. Copyright ©2000, Investopedia.com - Owned and Operated by Investopedia Inc. All rights reserved.  Read more
Financial & Investment Dictionary. Dictionary of Finance and Investment Terms. Copyright © 2006 by Barron's Educational Series, Inc. All rights reserved.  Read more
Wikipedia. This article is licensed under the Creative Commons Attribution/Share-Alike License. It uses material from the Wikipedia article "Investment strategy" Read more