Which Popular Investing Strategy Is Right For You?
Most people know that in order to build wealth, you need to invest your money. However, navigating the investment market is tricky — there are so many options and the landscaping is changing on a daily basis that it can quickly become overwhelming to first-time investors.
The truth is each investment option has its own advantages and disadvantages. One that is highly successful for one person might not work well for you. The trick is to find one that can fit your unique personality and habits.
For this reason, we have decided to feature the three most popular investment strategies in the market so that you can learn more about them and gather the information that you need to better decide which one is best for you.
The Three Most Successful and Popular Investing Strategy in the Market
Value investing is an investment strategy that involves the process of selecting stocks that are suspected to be trading for less than their book value. In other words, it’s buying a stock that’s unvalued to hopefully ensure a high return.
Investors who actively use this strategy assume the market overreacted to news about their chosen stocks which resulted in movements in the stock prices that do not correspond with the company’s long-term fundamentals. These overreactions by the stock market provide these investors with an opportunity to profit by purchasing these stocks at discounted prices.
This type of investment utilizes thorough and precise financial analysis of quality companies and is considered a long-term investment opportunity. Some of the most known value investors include Warren Buffet, Benjamin Graham, and Seth Klarman.
- The primary concept of value investing is to pick and buy stocks that are priced less than their intrinsic value.
- People using this investment strategy actively seek stocks that the market is underestimating.
- It is a long-term investment and investors using this strategy usually don’t follow the trend.
The next popular investing strategy that we are going to discuss is growth investing. This type of investment focuses on capital. People using this type of strategy typically invest in growth stocks — the stocks of new or small companies that are expected to grow at an above-average rate.
This form of investment is popular with many investors because it can provide impressive returns whenever the companies that they have bought stocks with are successful. On the other hand, they do pose a fairly high risk on your investment because most of the companies that this strategy targets are untried and inexperienced.
Stocks that investors target in this type of investment usually comes from rapidly expanding industries where new and innovative technologies are being developed. Investors gain profits in this type of investment through capital appreciation.
- The main concept of this investment strategy is to buy stocks from companies that grow at an above-average rate.
- Investors in this type of investment tend to favor young and smaller companies that are in a position to grow and increase profitability in the future.
- The key factors that investors consider when choosing a stock in this type of strategy include profit margin, ROE, share price performance, and the growth rate of historic and future earnings.
Real Estate Investing
Real Estate Investing is very hot right now. This type of investment has been steadily gaining more popularity over the last half-century or so.
It is a safe and high-yielding strategy that offers various options to investors including buying and selling homes and renting out properties for profit. And it’s versatile — you can either buy, flip, and sell homes, or rent them out for income.
Renting Out Properties
This real estate investing option turns investors into landlords. People that decide to use this strategy will need to perform various tasks such as finding tenants and resolving issues and will be responsible for paying mortgages, insurances, and property taxes.
Investors make money through this method by collecting rent. The amount of profit to be gained for this option will depend upon various factors such as location, expenses, and rental rates.
Unfortunately, unlike the other strategies mentioned above, real estate investing is a very hands-on investment strategy unless you hire a reputable property management company like the BC Team to handle all the details for you. Sure, it dips into your income slightly, but it saves you time and effort, and is a must-have if you plan on renting out numerous properties.
Buying and Selling Homes
Another real estate investing option that investors can choose is flipping houses. This type of investment involves purchasing properties with the intention of selling them for higher prices.
Investors typically purchase a home and then repair or upgrade it so that the property value can increase. It is a lucrative way to invest in real estate and investors can potentially earn huge profits if they can do it properly.
- There are a lot of ways that an investor can make money using this strategy including buying and selling homes and renting out properties.
- This type of investment strategy is very hands-on unless you hire a property management company to run all the details for you.
Final Words About Which Popular Investing Strategy is Right For You
Overall, all the investing strategies mentioned above can help increase your wealth and make you financially successful. All you need to do is to take time and evaluate all these options in order to find the best strategy that is appropriate for your investment style, personality, preference, requirements, and needs.