What are the different investment strategies in the stock market?

What are the different investment strategies in the stock market?

Investment strategies are a set of postulates that help an investor achieve their investment and financial goals. The strategies are formulated based on the investor’s financial goals, risk tolerance, and target corpus.They are also formulated keeping the investor’s short-term goals and long-term goals in mind.

These strategies can be curated by the investors themselves as well as the portfolio managers. The strategies need to be changed as and when required as per the circumstances, as a static strategy would not be feasible for every circumstance.

These stock investment strategies follow the mindset of an investor and the strategy they utilize to invest is affected by a number of factors, such as the investor’s financial situation, investing goals, and risk tolerance. There are five different types of investment strategies:

1. Value Investing: The strategy of value investing, in simple terms, means buying stocks of companies that the marketplace has undervalued. The goal is not to invest in no-name companies that haven’t been recognized for their potential – that falls more in the venue of speculative or penny stock investing.

2. Growth Investing: Growth investing is very similar, in the long-term, to value stock investing strategies. Basically, if you’re investing in stocks based on the intrinsic value of a company and its potential to grow in the future, you’re using a growth investing strategy. The general theory behind growth investing is that the growth in earnings or revenue a company generates will then be reflected by an increase in share prices.

3. Income Investing: This strategy is focused on generating a regular stream of income. Usually, these portfolios include bonds, stocks, Real Estate Investment Trusts (REITs), Exchange-traded funds (ETFs), and other such investment instruments that produce the highest passive annual income.

4. Socially Responsible Investing: In this investment strategy, investments are made, considering the social impact and the impact on the environment. The two primary goals of a socially responsible investing strategy are financial gain and social impact.

5. Small-Cap Investing: Small-cap investing strategy refers to investments made in stocks of small companies that have smaller market capitalisation, usually between $300 million and $2 billion. These investments are risky. Hence, choosing a strategy for investment requires a thorough understanding of the investor’s goals and which suits his needs best.

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