When it comes to investing, there is a strong need to have a strategy in place. Without a strategy, you will continue to make individual trades based on market sentiments, short-term trends, and news. Yes, it is possible to get returns from this that are sufficient, but it will not help you in the long term. To understand what does work, we will explore several investment strategies that you can pursue. Next, we will look at how a stocks tracker can support those strategies.
Long-term Passive Investing
Often dubbed the ‘boring’ kind of investing, but in reality very effective. When you have a long time horizon to invest in, this is a relatively safe bet. Instead of looking at individual stocks, you are purchasing ‘buckets’ of stocks known as funds. These funds can be purchased on an exchange – Exchange Traded Funds (ETFs). Some funds are very broad and cover a majority of the market (e.g., MSCI World). By purchasing these ETFs you are automatically diversifying your portfolio, minimizing the risk of exposure to individual industries.
Stay on Course
What makes long-term passive investing hard? You need to consistently invest every month or quarter over a long period, without withdrawing any funds. In this way, you are compounding interest through dividends and your portfolio will grow faster over time. This can especially be hard when markets go down. When you have a long horizon, this will happen once or twice. Stay in the market and continue with putting in funds!
Creating Your Portfolio
Next to passive investing, it is also possible to actively create and manage a portfolio. This does require more effort and you need to stay updated on the market. However, if you are interested and have the required financial literacy, this might be a good approach.
Create Buckets to Diversify
To start with, you need a holistic strategy. For example, the allocation of your investments into separate buckets:
- Blue-chip companies that pay dividends
- Growth stocks that are active in emerging technologies
- Small-cap companies
Based on your risk appetite, you can determine the division of your portfolio into buckets like those. Next, you can determine what type of companies that are emerging are interesting to you. For example, do you favor sustainable energy? Consider investing in solar panel firms.
Do note that it is hard to beat funds that are based on indices. For example, over the last ten years, the average hedge fund return was lower than the S&P 500.
How Can a Stocks Tracker Support You
A stocks tracker is an application that enables you to create a holistic overview of your portfolio. Not only does it provide you with real-time market prices, but it also offers news and analysis on stocks across the board. This allows you to stay informed, and even receive push notifications when markets are volatile. To support your buckets of investments, you can create portfolios within the tracker that enables you to track the performance of the buckets. Hereby you can adjust your strategy accordingly. Delta.app is a good example of a stocks tracker that offers advanced capabilities. It is not limited to stocks, but also offers the possibility to have insight into your crypto holdings.