Types of Investing Strategies: Find Your Niche
Updated: Nov 27
Investment strategies are an approach an investor takes in order to guide their trades and create a profitable portfolio. The goal is to pick the best strategy for you, depending on the amount of capital you hold, comfort with risk, and experience. Lots of investors choose to pick one strategy and stick with it in order to maximize the profitability of their portfolio. So, if you are looking for a strategy that suits your needs, lets go over a few!
Large Cap Investing
A large cap investing strategy focuses on buying into companies with a large market cap ($10 billion +). Large cap companies are safer and do better in times of volatility because they have a stable stream of capital, making it large cap investing low risk. These stocks include Apple ($APPL), Amazon ($AMZN), Disney ($DIS), and other big name companies. I personally use this strategy!
Small Cap Investing
Small cap investing focuses on stocks with a cap between $250 million and $2 billion. These stocks are at times volatile because of their limited resources, making small cap investing a risky option for beginners. However, it's still important to note these stocks have greater potential for growth.
Growth investing focuses on buying lesser known companies that are expected to outperform their sector or market. Growth investors do research into companies that have high potential to expand in profitability, and buy in when the company is young hoping to make big profits. These companies are often poised in new and emerging sectors.
Value investing focuses on companies that are undervalued or underestimated in their stock price. This can come about when the market reacts to bad news and a stock price dips, which could create an opportunity to buy in. This long-term strategy calls for plenty of financial analysis and research.
Dividend Growth Investing
This financial strategy focuses on stocks with a high and growing dividend yield. Investing in companies that give out consistent and high dividends creates a passive income that a lot of investors are looking for. Some stocks with a high dividend yield are AT&T ($T), Altria ($MO), and Hasbro ($HAS).
These strategies are just some of the popular ones that investors use to make money, and they are all lucrative in their own ways. Every trader curates their portfolio differently based on their individual needs, so make sure to do the same thing when picking a strategy!