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Smart Investment Strategy

Apr 17, 2008
A wise man once said that investing is like a game - you never know what is going to happen until the game is over and a winner is declared. Any game needs a strategy, without a strategy you will not be able to win. Investing is exactly the same, because investment is never a guaranteed thing in most cases, you need an investment strategy if you want to win. Being involved in investment is not enough, it is important to plan ahead and prepare before you invest. This is where the strategy comes in.

So, what is an investment strategy? Basically, an investment strategy is a plan where you invest your money in different types of investments in order to meet your financial goals in a specific amount of time. Each type of investment allows you to choose between many different individual forms of investments. Just like a clothing store sells many different individual forms of clothing - shirts, pants, dresses, skirts, undergarments, etc. The stock market is the same. Stock is one type of investment, but it contains many different stocks, all of which are individual companies that you can invest in.

Without doing any research beforehand, the stock market can soon become extremely confusing. There are so many different types of investments, and so many different individual investments to choose from. However, making a strategy, by analysing your risk tolerance and investment style, can allow you to not only make sense of the confusion, but to win at it. A good strategy allows you to manage your risk within your tolerance level, thus preventing you from panicing during a short drop in stock price. This is important as many people panic when their stock drops and abandon their strategy totally. Always stick with your strategy. If it is a sound one, your strategy will enable you to turn a positive return.

If you are new to investing, working closely with a financial assistant can also help you to make sense of the stock market. A financial planner can help you manage your risk by helping you to develop an investment strategy which fits your personal investment style. Not only that, but he can also help you to analyse how your investments can enable you to attain your financial goals that you set out. Getting the help of a financial planner is very important especially if you are new to investment strategy.

Investing with a goal and a strategy is absolutely a must. It is essential. You should know exactly how your money is being used to invest and when will you get it back. That is why you need a plan, a goal and a strategy. No one would hand over their money if they do not know when they will get it back or what the money is being used for. If you do not have a strategy, this is exactly what you are doing. Before investing, you need a goal, and you need a strategy for reaching that very goal.
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