People sometimes speak of bad investment strategies. But it is among all things possible that there may not be any such thing as a bad investment strategy. It may just come down to the wrong investment strategy for a certain kind of investor.
We know for a fact that pretty much every kind of investment strategy has proven to make money and be successful for somebody. We also know that the strategy that works for one person might not work out the same way for another.
So if you are interested in investing in the market, the real question is not what is the best investment strategy, but what is the best investment strategy for you. The answer to that question depends very much on your personality, goals, and time frame. Here is an example of how each of these influences might affect you:
Investment As an Extension of Your Personal Interests
Some say you should never invest in a stock in which you are emotionally involved. While avoiding emotional investment is sound advice, it can be taken to extremes. You want to invest in stocks about which you are knowledgeable. It so happens that you will be most knowledgeable about companies with which you have a personal relationship.
If you are that type of adventurer, it is perfectly natural for you to own many of the products, follow the trades, and keep up with company details. In this case, you are not just investing in a company. You are investing in your own personal lifestyle interests. Investing in what you know also means investing in what you care about.
Investments for When Profit Is Not the Only Goal
No one invests to lose money or break even. That said, there are other goals besides making the maximum amount of return. Some might invest aspirationally. That is to say, they invest in the type of company they want to succeed.
On the small scale, crowdfunding a project is a way to invest in a company you hope to succeed. You are not just trying to get a product or service for cheap. You believe in the company. And you want to do what you can to help out.
If you are teaching your kids how to invest while maintaining family values, you might not want to invest in Uber: a company seemingly bereft of anything remotely resembling ethical values. You might prefer to invest in something that reflects your personal values. After all, if you want the world to be a certain kind of way, then you have to be willing to make certain kinds of investments.
Investments That Return on Time
If you are risk averse but don’t have 20 years to wait for your investment to mature, you will want to check out some of the best short term investments for your money right now. Slow, patient growth over a long period of time is not the right strategy for everyone. Countless people have made countless millions day trading.
The key is to be realistic about your expectations and timing needs. Mix and match these three options:
- Make a lot of money
- Make really fast money
- Make money at low risk
If making money fast is one of your options, then it is either going to be not very much money with low risk, or it could be a lot of money with high risk. You have to apportion your risk and expectations with your personality, goals, and timeframe.
It the end of the day, this is true for all investing whether it is based on your personal interests, your aspirations and values, or your timeframe for success.
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.