One of the ways an investor can add value to their capital is by developing an investment strategy, which is a series of tools and techniques for managing an investment portfolio. Every investment company applies one or more investment strategies in practice. There are five main investment portfolio management strategies, and an investor may use one or several strategies altogether.
Dividends is the most popular investment strategy which involves buying stocks of various companies. Subsequently, these shares begin to generate income in the form of a percentage of the company's profits. To become one of the shareholders, you need to buy shares in a company before the register of shareholders is closed. The right choice of a company, which is becoming increasingly profitable, is capable of generating a steadily high income for the investor.
Long-term share ownership is a strategy for investors who wish to reduce their risks. While the purchase of shares may deprive an investor of income should the company fail, a long-term holding of at least one year is capable of yielding up to 50% per annum without much risk. The fact is that with such a strategy, the investor allocates shares to several sectors which are independent of each other.
Medium-term shareholding is an intermediate strategy. Under a medium-term shareholding strategy, an investor buys shares for up to a few months and earns money on them during this time. At the time of a price peak, the shares are sold and the investor buys a new block of shares at a low price. This strategy is suitable for investors who practice fundamental analysis to diagnose the current market situation.
Positional trend trading is a strategy for those who don't want to limit themselves by a deadline. According to this strategy, an investor holds the stock as long as the market situation is stable and sells it as soon as changes occur. The return on this strategy can be up to 400%.
Intraday trading is the most dynamic investment strategy. It involves earning income from fluctuations in the price of a stock within one session. During this time, an investor can make up to a few dozen purchases and sales. This methodology is highly profitable, but it is risky, which is why an investor using this strategy needs maximum concentration and the ability to react quickly to the slightest changes in the price chart.