Strategic investment planning can pertain to a series of set of principles that is meant to help an individual investor achieve their personal and business goals. The strategic investment planning will be his guide as he makes decisions based on tolerance, goals, and future needs for capital. Some investment planning guides are conservative. The latter is a low-risk strategy focused on protecting wealth. On the other hand, there is also highly aggressive strategic investment planning. There is a lot of risk to lose capital because the focus is on rapid growth of money through capital appreciation.
Investors can use their own strategies to build their own portfolio or they can do so with the help of an investment professional. If one is a beginner, it might be better to seek the help of a professional. This is because strategic investment planning is not a one-time game. The market can change periodically which means that your strategy needs to change every once in a while.
Investment Strategies Overview
When we talk about investment strategies, we usually refer to styles or methods of investments that are considered to be best practices in the market. We call it that because these strategies can help investors get the most gain from their investments.
Even though strategies sound as if it is a predicted method, it can still vary on different factors namely:
- Available capital
- Expected return
- Financial situation
- Family or living situation
Of course, this is not the entire list. Investors can determine what factors should affect their strategic investment planning on their own. Or they could seek the help of an investment professional who can identify them.
As these factors are determined, the investor will be able to identify which investment strategy would best suit his situation and financial goals.
Strategic Investment Planning Can Vary Greatly
There is no one-size-fits-all solution for this. This means that before one can determine the best strategy for his investments, he needs to examine his trading psychology and living situation first or undergo an examination provided by an investment professional.
This also means that he will not only have to do this once but also several more times in the future. What is working today may not be as effective anymore in a year or two.
There is no right or wrong way to manage a portfolio but if you are an absolute beginner, it is most recommended that you work with an investment professional since he knows the market works. He knows how to conduct the right research and then apply them into your investments. The experience with an investment professional will also take you to a learning journey that will equip you with the right skills to manage your own investment portfolio in the future.
Special Considerations in Investments
Take note that investments are not only about growing your money. It is about losing some of your capital as well.
The reason it is called an investment is because there is a sense of having to potentially lose your money. When you take a certain amount as an investment. It could either grow which results in a gain or it could decline and it will result in a loss in your investments.
This is something to consider since all investments have some type of risk. The key is in knowing how to analyze and time the market. The market has its lows and highs. As long as you know how to navigate it, you will surely make money in the long haul. But of course, losses will be inevitable along the way. The important thing is that you know how to manage risks so that even if you encounter losses, the amount of losses will still be minimal compared to the gains that you will receive.
The process sounds simple enough but can be quite technical. This is why seeking the help of an investment professional can come in handy. If you are new to the world of investments, working with a professional can save you a lot of losses that you could experience in your initial trades.
As an investor, below are some things to keep in mind:
- The riskier the investment, the higher the potential for gains
- Only invest the amount that you are prepared to lose
- There are investments that guarantee a preservation of capital but the gains are pretty minimal
Keeping the risks in mind, one should also consider changing strategies from time to time. Your current investment strategy could save you from big losses today but in the next few weeks or months, the market could be different and could require a different investment strategy if you want to grow your money while also protecting your principal.
Value Investing and Growth Investing
Value investing pertains to the purchase of stocks that have lower prices compared to its intrinsic value. Meanwhile, growth investing means that you will buy stocks that are perceived to have high value in terms of company background and sales projections.
Allow us to give you an example of strategic investment planning. For instance, a 25-year old who wants to start investing for retirement purposes may want to take riskier investments because he has lots of time to invest. Also, since he is young, he can be more tolerant to the risks.
Apart from that, if the market is downhill, the 25-year old can afford to lose some money because he has lots of time to earn more money. He can invest in both stocks and real estate.
On the other hand, a 45-year old does not have the same luxury with regards to time. So, instead of investing in risky investments, it is better to invest in conservative plans. Government securities and bonds are two examples of conseravtive investments that someone at this age bracket would want to look at.
Now, if someone wanted to buy a vacation home, he would need a different strategy. Instead of investments, it might be better to put away his money on a savings account instead. That’s the difference between someone wanting to have some retirement money and someone simply wanting to do something with his money.