Investment Strategy: How To Proceed

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It is very important to start investing earlier. Research has shown that when you start investing, the investment strategy is more important than how much you invest. The number of years that you spend in the stock market will be your experiences. It will affect your growth in a good way. For instance, if you start the age of 40 you can earn money even if you can double your money with your experiences. However, if you start at your 20s you can learn and earn much more, maybe you can 5xed your money.

Each year you spend on investing gives you one year of exponential growth. It means basically the longer you stay in the market, the more of an effect it will have. It is the most important investment strategy.

Tax Strategy

investment strategy

Most of the new investors enjoy buying and selling stocks. The problem with this buying and selling is tax. Whenever you sell a stock for more than you buy it you have to pay taxes. Capital gain applies for things like real estate and cars. Short term gains happen when you sell the stock that you owned less than a year. Long term gains occur when you sell the stock that you owned for more than a year.

Short term gains taxed as your ordinary income. Long term gain taxes are always lower than short term gains. Therefore, advisors recommend holding a stock for long term because it is less stressful. The taxes that you pay depend on your profit. If you want to learn more about taxes, you can go and read our article about cryptocurrency taxes.

Diversify

investment strategy

Do not put your everything in one place. You can be rich with just one good investment, but it will be riskier so you can lose your everything with one investment. You should diversify your investment as much as possible. You should also have cash to catch some opportunities. For example, if you diversify your investments to 5 places, it means that if something happens to one of them, you still have 4 more investments and money to back it up.

Do Not Try To Time The Market

investment strategy

Timing the market investment strategy is false. If you ever tried to time the market, you can think that you have bad luck, no, it is not right. Timing the market is so hard so you can time it wrong every time. Stock market is still very volatile. For instance, if you had left $5,000 in index funds from 2000 and you had not touched it until 2015. It would have been worth about $10,000- $12,000.

If you had missed the 10 best growth days in that period, you would only have about $8,000. It is all about timing. The time that you spend in the market is much more valuable than timing the market.

Invest Long Term

investment strategy

Some people are day traders, and their goal is getting in and out as quick as possible and make big profits with that. Of course, everyone has a different investment strategy, but it is not the strategy that people suggest. You can do your own research, buy a stock once and forget about it. It is statistically proven to be the best method. Things never go up in a straight line in the market, things will go up and down therefore it is important to have a long-term outlook.

Do Your Own Research

investment strategy

I do not know if it is investment strategy or not buy do not invest in something that you do not understand fully. It is the key and most important thing about investment. There are so many books, articles, videos that you can learn from about finance. Make sure that you do your own research and do not trust anybody. You are responsible for all your financial decisions.

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