Investing For Beginners – Free Investment Articles and Tutorials

It is very difficult to predict as to how the stock market will behave. That is why each investor adopts his own strategy to earn the highest returns. However, the wise investor is one who studies the different investment strategies and then takes a decision as to which strategy or strategies to adopt.

For the beginner the best strategy to adopt is the dollar cost averaging strategy. This strategy involves allocating a small dollar amount for investment in a few select stocks at regular intervals. The advantage of such a strategy is that the investor is not influenced by the changing market price. He may end up buying a few stocks at a high market price, and a few at a low price. The end result is that the highs and lows get evened out.

Another safe strategy is the buy and hold strategy. In this strategy the investor buys the best stocks, and then puts them in a bank. He is unconcerned by the rise or fall in their rates for periods that may range from ten to 15 years, or even more. Invariably, such an investor will make a neat profit when he sells the stocks after the holding period. This strategy is borne out by historical data too.

The third popular strategy is to invest in the stocks of those companies that are expected to grow and become more profitable over the years. This strategy is known as the growth strategy. It works for those investors who study the fundamentals of promising young companies properly and then make their investment decisions.

A related investment strategy is known as value strategy. This involves buying stocks of fundamentally strong companies when they are trading at low prices. This too is a relatively safe strategy for those investors who have done their home work well.

The riskiest is the market timing strategy. This is adopted by speculators. who believe that they know the market pulse. They therefore invest large sums when they think that the market is going to go up or pull out large sums when they think that the market is about to tank. This is a very risky strategy though it can deliver high returns.

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