How do I Choose the Best Investment Strategy?

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  • Written By: Ken Black
  • Edited By: Bronwyn Harris
  • Last Modified Date: 09 October 2018
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Choosing the best investment strategy depends on several different circumstances. These circumstances involve the position in life one is in, that individual's investment goals and the time they have to invest. Often, one person's acceptable investment strategy will be totally unacceptable for another person. Therefore, understand what you may need, consult a investment adviser, also known as a financial planner, and choose accordingly.

For many people, the best investment strategy will likely be a a 401(k) plan with an employer match. Employers may match, dollar for dollar or some other amount, for every dollar the employee invests up to a certain amount. This means that for those receiving a dollar for dollar match, the investment could still lose as much as half its original value and the investor has really not lost a penny. However, during good times, this investment strategy truly will be a big winner.

The other thing to consider when investing and looking at finances is how old the individual is and at what age he or she is hoping to retire. The best time to take risks is early on in an investment program. The farther away from retirement the individual is, the more time there will be to recoup any losses. This may not only be the time for stocks, but more risky stocks. As retirement draws near, bonds and secured investments will be more recommended. This is standard with nearly all types of retirement fund management strategies.


For those who wish to have some semblance of stability, but with a reasonable opportunity for growth coming up with a diversified investment portfolio is a good option. The portfolios are filled with stocks that will help counteract each other to some extent. When some of these stocks are doing poorly, others will likely be doing well. The overall goal with this investment strategy is to find a combination that will lead to steady, sustained growth. An IRA will seek to do this.

Choosing the best investment strategy also means not panicking when things don't go the investor's way. While there may be some temptation to find a new strategy as soon as conditions start turning against a strategy, often the best plan is simply to stick with the program. In some cases, such as those who are nearing retirement, there may be no choice but to switch to something more stable.

For those who simply like to trade stocks as a hobby, or for fun, the best investment strategy may be a day-trading strategy. This strategy should not be employed by those looking for long-term growth or depending on the money invested for retirement. Rather, this is just a hobby for those who want to test how well they can predict the stock market, and do so with real money.



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