examples of long-term investments

Long Term Investment Strategy Example

The investment strategy example depends on the tasks, willingness to take risks, and other characteristics of the person that will be described in the article below.

How to Choose the Most Successful Investment Strategy?

The development of a company’s strategy is one of the most difficult types of consulting. As practice shows, serious work on a strategy is effective and gives the maximum return in cases where a business needs a professional opinion of independent experts. The most effective strategy development tool is the strategy session. However, in any case, you must have a clear investment strategy.

An investment strategy is all about risk-sharing. Understanding risk is key when investing. You must clearly understand what risks you are willing to take. Warren Buffett once said, “If you can’t sit still and watch the market drop 50%, you don’t belong in the stock market.” If you do not want to risk your capital at all, you need to choose conservative investment instruments, but at the same time, you must understand that the income will not be high. Conversely, if you are risk-averse, invest more aggressively and you may be rewarded. Only you can decide what is more important for you – restful sleep or high income.

The choice of investment strategy most of all affects the profitability of investments. This was shown in a classic study in 1986, in which economists calculated what it depends on:

  • The distribution of assets by class, that is, the strategy itself, affects 93.6% of the return on the entire portfolio. It is a choice between stocks, bonds, cash, and alternative assets.
  • The decision to purchase specific securities determines the yield of 4.2%.
  • The timing of the purchase and sale of assets affects even less, at 1.7%.
  • Commissions of the exchange and broker cause about 0.5–0.6%.

How to Create an Investment Strategy?

People are subject to emotions and therefore tend to make unfavorable decisions under the influence of stress or pressure. Often a trader cannot control his emotional state to the required degree and follow the chosen strategy. Before choosing the optimal strategy, determine your investment psycho type.

More active users are also contributing to new forms of value in investment strategy through user-driven innovation. Thus, consumer/user activities can provide a potential base for firms to create platforms to bring them together. This plan depends on the tasks, willingness to take risks, and other characteristics of the person.

Usually, people who are professionally versed in financial matters and investing prefer to independently enter the stock market through a broker. But even among them, not all are luminaries. After all, as you know, the market is an unpredictable thing, and not every analyst or trader can predict its future mood. What then to say about the newcomers? In this situation, the most reasonable thing would be to follow the “golden” rule: never invest in an instrument that is not clearly understood.

The first, most common type of creating an investment strategy is high-risk. Most often, it is chosen by novice investors who want to get a quick result without having a lot of capital to start an investment career. But back to high-risk investments. They really very often pay off in the first year of operation. That is, roughly speaking, they bring 100% per annum. But there is a chance of success when choosing a high-risk strategy only if several important conditions are met.