What is an investment strategy?
This is a clear plan of your actions on the stock exchange. It should take into account for what purpose and for how long you want to invest money, how often you intend to make transactions, what you will focus on in your decisions. And also — what profit do you expect and what losses are you ready to put up with.
The strategy will help you make a balanced investment portfolio, avoid rash decisions, and therefore reduce the likelihood of losses.
Investments are always associated with the risk of losing money, but if you act simply on the call of your heart or on the advice of friends, it will only complicate the situation. Therefore, you need to stick to a clear plan. At the same time, do not forget to revise it, for example, when the market situation is changing very much.
1. Decide on the goal
Answer yourself a few questions: why do you want to invest, how much money are you ready to invest and when exactly you will need money.
Some people want to save up for a car with the help of investments, others expect to pay for their children's studies, and someone plans to ensure a comfortable old age. You can have several goals, as well as investment portfolios.
2. Set the deadline
It directly depends on your investment goal, or rather, on when exactly you will need money. According to the term of the strategy there are:
A long-term strategy allows you to choose almost any instruments with different levels of risk and expected income.
Investments in precious metals are also suitable – their prices fluctuate greatly and may fall in a year or two. But over long distances, they tend to outpace inflation and serve as a protective asset during periods of global instability in financial markets.
When you play for a long time, it is especially important to distribute investments between different companies, industries and types of securities – to diversify investments. This way you will make the composition of your portfolio balanced and reduce risks.
The medium-term strategy has a slightly smaller set of tools, but still quite large. You can choose assets that, even if they fluctuate in price, usually bring profit on the horizon of 1-3 years. For example, shares of reliable companies that regularly pay dividends, federal loan bonds or reliable corporate bonds, shares of exchange-traded, open-ended or interval mutual funds.
In the case of a medium- and long-term strategy, there is no need to constantly monitor quotes, it is enough to monitor the situation on the market as a whole and periodically adjust the composition of your portfolio.
With long-term investment, you can get additional income if you use an individual investment account (IIS). Do not withdraw money from it for three years and in addition to the profit from investments you will be able to receive an investment tax deduction.
If you may need money soon, choose a short-term strategy.
Only liquid assets will suit you – that is, those that can be sold at any time. For example, freely traded stocks, bonds, shares of open and exchange-traded mutual funds.
The profitability of short-term investments depends much more on the temporary fluctuations in the quotations of your assets than in the case of long-term investments. If you are aiming for a quick profit, then you should be prepared for serious losses.
3. Estimate how much time you plan to spend on investments
If you are not ready to constantly monitor changes in financial markets, read news and study company reports, your option is a passive strategy. It is optimal for long-term and medium-term investments.
In this case, you do not need to spend a lot of time analyzing the current situation. However, even with a passive approach, you can't just put together a portfolio and forget about it – any investment requires control. From time to time, you need to evaluate your assets and their risks, if necessary, adjust your set – for example, once a quarter or every six months.
Investors who are ready to react promptly to news and trade literally every day use an active strategy. They choose the tools that can bring the maximum income, and constantly monitor the best time for purchases and sales.
An active strategy allows you to get more profit, but at the same time it is associated with higher risks. The success of such a strategy depends on how correctly you assessed the market situation. And it should be borne in mind that active investors have to pay more commissions for operations to the broker and the exchange than passive ones.
When choosing an investment plan, take into account, among other things, your character. Active strategies require a lot of energy and strong nerves. If you are having a hard time losing money and may panic, you should not start a risky game.
4. Decide what risk you are ready for
According to the level of risk, investment strategies are divided into conservative, moderate and high-risk. Usually, the greater the potential profit from investments, the higher the probability of losing everything.
A conservative strategy is suitable for those who do not want to jeopardize their capital. The main goal of such investors is to protect their money from inflation. Most often conservative investors choose OFZ, securities of the largest companies and precious metals.
High returns from such investments should not be expected – as a rule, it will be at the level of the bank's key rate, sometimes slightly higher. However, such investments can bring more than interest on a bank deposit (especially if a person makes a tax deduction). And the probability of losses is not very high.
If, on the contrary, you are chasing maximum profit and at the same time easily accept the loss of your investments, a high-risk or aggressive strategy will suit you.
More often, this approach is chosen by young people who have the time and energy to restore their savings in case of losses. Aggressive investors often invest in stocks of undervalued companies by the market. Such securities can both grow dramatically and bring big profits, and leave you with nothing.
Most investors still prefer a moderate strategy. It involves the choice of financial instruments with different levels of risk. For example, a third of the money can be invested in the most reliable bonds – the state and the largest companies, as well as in precious metals. Half of it should be sent to the shares of the first quotation list and the shares of index mutual funds. And a small part of the risk is to buy potentially more profitable stocks or bonds of medium and small companies.
With a moderate strategy, an investor forms a balanced portfolio that allows for higher returns than a conservative one, but with a lower level of risk than an aggressive one.
The investor's attitude to risk is often related to how much time he is willing to spend on trading. Moderate and conservative strategies usually do not involve high activity, while an aggressive investor can make dozens of transactions per day.
I have decided on a strategy. What to do next?
First you need to properly understand the work of the exchange and the features of various financial instruments. The text "Where to learn to invest" will help you choose the best way to prepare.
If after training you are ready to trade on your own, choose a broker and start investing.
When it is still difficult for you to navigate the stock exchange, you can turn to an investment adviser. He will tell you how to make an initial portfolio, and then, if necessary, help you adjust it.
Investment advisors are responsible for their recommendations – unlike numerous investment bloggers, who do not always act in your best interests. It is worth concluding an investment consulting agreement only with specialists who have a bank license.
If you do not want to conduct transactions yourself, you can entrust this to a trustee. He will offer you a choice of ready-made standard investment strategies or develop an individual one for you. It remains only to decide which one will suit you. And in any case, from time to time it is better to monitor the state of your portfolio.
If it seems to you that the strategy does not work, does not bring sufficient profit or even losses, discuss with the manager the possibility of changing the standard strategy to another one or adjusting the individual one.
This is a clear plan of your actions on the stock exchange. It should take into account for what purpose and for how long you want to invest money, how often you intend to make transactions, what you will focus on in your decisions. And also — what profit do you expect and what losses are you ready to put up with.
The strategy will help you make a balanced investment portfolio, avoid rash decisions, and therefore reduce the likelihood of losses.
Investments are always associated with the risk of losing money, but if you act simply on the call of your heart or on the advice of friends, it will only complicate the situation. Therefore, you need to stick to a clear plan. At the same time, do not forget to revise it, for example, when the market situation is changing very much.
Answer yourself a few questions: why do you want to invest, how much money are you ready to invest and when exactly you will need money.
Some people want to save up for a car with the help of investments, others expect to pay for their children's studies, and someone plans to ensure a comfortable old age. You can have several goals, as well as investment portfolios.
2. Set the deadline
It directly depends on your investment goal, or rather, on when exactly you will need money. According to the term of the strategy there are:
- long–term - you expect a return on investment not earlier than in three years;
- medium–term - are you ready to invest for a period of one to three years;
- short–term - you plan to withdraw money from the stock market in less than a year, or you may need it at any time.
A long-term strategy allows you to choose almost any instruments with different levels of risk and expected income.
Investments in precious metals are also suitable – their prices fluctuate greatly and may fall in a year or two. But over long distances, they tend to outpace inflation and serve as a protective asset during periods of global instability in financial markets.
When you play for a long time, it is especially important to distribute investments between different companies, industries and types of securities – to diversify investments. This way you will make the composition of your portfolio balanced and reduce risks.
The medium-term strategy has a slightly smaller set of tools, but still quite large. You can choose assets that, even if they fluctuate in price, usually bring profit on the horizon of 1-3 years. For example, shares of reliable companies that regularly pay dividends, federal loan bonds or reliable corporate bonds, shares of exchange-traded, open-ended or interval mutual funds.
In the case of a medium- and long-term strategy, there is no need to constantly monitor quotes, it is enough to monitor the situation on the market as a whole and periodically adjust the composition of your portfolio.
With long-term investment, you can get additional income if you use an individual investment account (IIS). Do not withdraw money from it for three years and in addition to the profit from investments you will be able to receive an investment tax deduction.
If you may need money soon, choose a short-term strategy.
Only liquid assets will suit you – that is, those that can be sold at any time. For example, freely traded stocks, bonds, shares of open and exchange-traded mutual funds.
The profitability of short-term investments depends much more on the temporary fluctuations in the quotations of your assets than in the case of long-term investments. If you are aiming for a quick profit, then you should be prepared for serious losses.
3. Estimate how much time you plan to spend on investments
If you are not ready to constantly monitor changes in financial markets, read news and study company reports, your option is a passive strategy. It is optimal for long-term and medium-term investments.
In this case, you do not need to spend a lot of time analyzing the current situation. However, even with a passive approach, you can't just put together a portfolio and forget about it – any investment requires control. From time to time, you need to evaluate your assets and their risks, if necessary, adjust your set – for example, once a quarter or every six months.
Investors who are ready to react promptly to news and trade literally every day use an active strategy. They choose the tools that can bring the maximum income, and constantly monitor the best time for purchases and sales.
An active strategy allows you to get more profit, but at the same time it is associated with higher risks. The success of such a strategy depends on how correctly you assessed the market situation. And it should be borne in mind that active investors have to pay more commissions for operations to the broker and the exchange than passive ones.
When choosing an investment plan, take into account, among other things, your character. Active strategies require a lot of energy and strong nerves. If you are having a hard time losing money and may panic, you should not start a risky game.
4. Decide what risk you are ready for
According to the level of risk, investment strategies are divided into conservative, moderate and high-risk. Usually, the greater the potential profit from investments, the higher the probability of losing everything.
A conservative strategy is suitable for those who do not want to jeopardize their capital. The main goal of such investors is to protect their money from inflation. Most often conservative investors choose OFZ, securities of the largest companies and precious metals.
High returns from such investments should not be expected – as a rule, it will be at the level of the bank's key rate, sometimes slightly higher. However, such investments can bring more than interest on a bank deposit (especially if a person makes a tax deduction). And the probability of losses is not very high.
If, on the contrary, you are chasing maximum profit and at the same time easily accept the loss of your investments, a high-risk or aggressive strategy will suit you.
More often, this approach is chosen by young people who have the time and energy to restore their savings in case of losses. Aggressive investors often invest in stocks of undervalued companies by the market. Such securities can both grow dramatically and bring big profits, and leave you with nothing.
Most investors still prefer a moderate strategy. It involves the choice of financial instruments with different levels of risk. For example, a third of the money can be invested in the most reliable bonds – the state and the largest companies, as well as in precious metals. Half of it should be sent to the shares of the first quotation list and the shares of index mutual funds. And a small part of the risk is to buy potentially more profitable stocks or bonds of medium and small companies.
With a moderate strategy, an investor forms a balanced portfolio that allows for higher returns than a conservative one, but with a lower level of risk than an aggressive one.
The investor's attitude to risk is often related to how much time he is willing to spend on trading. Moderate and conservative strategies usually do not involve high activity, while an aggressive investor can make dozens of transactions per day.
I have decided on a strategy. What to do next?
First you need to properly understand the work of the exchange and the features of various financial instruments. The text "Where to learn to invest" will help you choose the best way to prepare.
If after training you are ready to trade on your own, choose a broker and start investing.
When it is still difficult for you to navigate the stock exchange, you can turn to an investment adviser. He will tell you how to make an initial portfolio, and then, if necessary, help you adjust it.
Investment advisors are responsible for their recommendations – unlike numerous investment bloggers, who do not always act in your best interests. It is worth concluding an investment consulting agreement only with specialists who have a bank license.
If you do not want to conduct transactions yourself, you can entrust this to a trustee. He will offer you a choice of ready-made standard investment strategies or develop an individual one for you. It remains only to decide which one will suit you. And in any case, from time to time it is better to monitor the state of your portfolio.
If it seems to you that the strategy does not work, does not bring sufficient profit or even losses, discuss with the manager the possibility of changing the standard strategy to another one or adjusting the individual one.