| A well-planned investment strategy is essential | | | | investors is associated with the investors holding |
| before having any investment decisions. A | | | | on for very long periods. In the case of real |
| business strategy is generally based upon long run | | | | estate, the holding period extends the lifespan of |
| period. Formation of business strategy largely | | | | the mortgage. Notably, in case of this strategy, |
| dependent upon the factors such as long-term | | | | indexing or buying a small proportion of all the |
| goals and risk on the investment. | | | | shares in market index or a mutual fund is a |
| As the return on investment is not always clear, | | | | purely passive variant of the above strategy. |
| so the investors prepare the strategy so as to | | | | The strategy of value investing, a classic |
| face the ongoing challenges in investment. A | | | | investment strategy propagated by Benjamin |
| balanced investment strategy is generally required | | | | Graham simply concentrates on the strategy that |
| in the process of investment, which possesses | | | | an investor buys shares of a company as if he |
| long time period and some risk tolerance. | | | | was buying off the whole company without |
| In the case, when a strategy is aggressive the | | | | paying any attention to the stock market |
| chance of attaining a higher goal is higher. An | | | | scenario or any exterior conditions such as the |
| efficient strategy can be obtained from portfolio | | | | political climate. At the end of the day, if he can |
| theory, which shows good estimates on risk and | | | | buy the stock at less than that its actual future |
| return. | | | | worth to the buyer, the person is said to have |
| Strathclyde Associates Investment Guide: | | | | discovered a "value investment." |
| Investment Strategy is usually considered to be | | | | Investment strategies can also denote the |
| more of a branch of finance than economics. It is | | | | investment strategies a national or federal |
| defined as set of rules, a definite behavior or | | | | government should follow to bring about economic |
| procedure guiding an investor to choose his | | | | growth in a country. This can only be achieved by |
| investment portfolio. For example, investing in | | | | domestic investment as well as significant FDI |
| mutual funds has recently emerged as a very | | | | (Foreign Direct Investment) flows to particular |
| favorable investment strategy. | | | | sectors of countries, especially the less developed |
| An investment strategy is centered on a | | | | ones of Asia and Africa. |
| risk-return tradeoff for a potential investor. High | | | | In case of India, infrastructural problems, |
| return investment instruments such as real estate | | | | excessive government intervention, rigid labor |
| and mutual funds usually have more risks | | | | laws and corruption are stifling the flow of FDI in |
| associated with it than low return-low risk | | | | the critical sectors. Less developed countries such |
| investment opportunities. Return on investment | | | | as those in the Asia- Pacific region and Africa can |
| can be calculated on past or current investment | | | | bring about much needed development in these |
| or on the estimated return on future investment. | | | | economies. |
| Symbolically, it can be expressed as: Vf/Vi -1 | | | | An investment strategy in mutual funds is |
| where Vf denotes final investment value and Vi is | | | | probably the best bet for a profitable investment. |
| the initial investment value. ("f" and "i" should be | | | | Mutual funds is defined as a pool of money |
| noted as subscripts) | | | | supplied by different investors and in turn used by |
| Strathclyde Associates Investment Guide: Return | | | | the mutual fund company to invest in various |
| on investment (ROI) is profitable when Vf | | | | assets such as stocks and bonds. However, a |
| Vi-1>0 and the investment is deemed to be | | | | detailed research has to be conducted for |
| unprofitable when the value of final investment is | | | | choosing the mutual fund companies and only |
| less than that of the initial investment. ROI is | | | | those should be considered which have a |
| calculated to be 1 or 100% when the value of the | | | | professional investment manger. This will ensure |
| final investment is twice the value of the initial | | | | that the funds get channeled towards the right |
| investment. | | | | investments. This also applies for investing in |
| Types of investment strategies can be defined as | | | | stock markets where a decision to invest should |
| follows: A passive investment strategy | | | | follow a through research about the past and |
| attempted to minimize transaction costs. | | | | current trends of the stock prices and their Net |
| An active investment strategy guide used to | | | | Asset Values (NAV). Analyses from market |
| maximize returns based on moves such as | | | | researchers about the predicted future trends |
| proper market timing. This usually mean, "buying in | | | | should also be considered otherwise gains from |
| the lows and selling in the highs" or buying | | | | capital appreciation; capital gain distribution (in case |
| investment instruments when they are cheap and | | | | of mutual funds) and dividends might not be |
| selling them off when their price appreciates. This | | | | realized. |
| strategy, however, is not very beneficial for small | | | | Lastly, investment strategies leading to green |
| time investors. | | | | investments or investments in renewable sources |
| Small time investors can adopt the buy and hold | | | | of energy will be the next big thing in the |
| investment strategy to invest in equities, which | | | | investment spectrum. From Economy Watch. |
| although volatile in nature, give favorable long run | | | | Economy, Investment & Finance Reports. |
| returns. Investing in equity markets for small time | | | | |