Basic Types of Investment Strategies in 2019

Investing your money in any plan will fetch you long term benefits when you do it with a properly planned investment strategy. Good investment strategies can give an extra edge to your portfolio and increases your chances of success at a significant rate.

Types of Investment Strategies

Now before going for investment strategies you need to know the various types of investment strategies that are there. Let us understand them.

Value investing

This is an investing strategy which was popularized by Warren Buffet. The main principle of such type of strategy is to buy those stocks which are cheaper than they actually should be. Now it takes a lot of research and time to find out underpriced stocks. For this, you need to understand the fundamentals of the lying companies. One needs to be quite patient with this kind of strategy, and later they are rewarded with a good payoff.

Income investing

This is considered to be great when in terms of binding up your wealth over a significant amount of time. In this type of investing strategy, one buys the securities which are typically paid out returns on a regular period. Now for the fixed income securities, bonds are the best example. Other than that, there is ETFs, dividend-paying stocks, real estate investment trusts, mutual funds, etc. this provides a reliable income stream.

Growth investing

The main focus of this type of investment strategy is on capital appreciation. In this, the investors are continuously looking out for those companies that have above average growth from their revenues and their profit margins. Thus in the growth investing, one gets to invest into small smaller companies having good potential of growth and shows signs of an emerging market. This type of investment strategy is considered to be little risers than the above two mentioned.

Small cap investing

Now, this type of investment strategy is most suitable for those who won’t hesitate to take some risk in their portfolio. In this type of investment strategy, one has to purchase those stocks that are of the smaller companies and on top of it; those companies will have lower margins. Now the reason why the companies with small caps look appealing to the investors is that they can quickly go unnoticed. While those companies that have large capital stocks are often having high chances of getting inflated price. Now it is suggested that people who are experienced in the stocks investments should only go with this. This is because these are relatively more volatile and hard to be traded.

Socially responsible investing

In this type of investing strategy, there is a portfolio such that, the companies will maintain a universal friendliness while also keeping up with the competition side by side. Now in today’s trading market, a majority of the investors and the traders expect the companies to be able to maintain a social conscience.

Conclusion

Thus the above mentioned are the five different kinds of investments strategies that one can follow. One should choose them by an individuals’ capability and demands.

4 Pseudo-Investments Young People Will Soon Gravitate To

crypto

If you feel like you’ve seen a dozen articles about how millennials and the next generation beneath them don’t trust the stock market, it’s probably because you have. This is a very common topic of conversation in investing circles these days, and while there’s some data to suggest it’s an overblown point, the underlying idea still makes some sense. Wary of market corruption, tight on finances in general, and in many cases having seen their parents struggle through a recession, young people do often have a certain distrust for conventional styles of financial management and investment. It’s only natural that many in this category will seek alternatives to the markets, and we’ve certainly seen them doing so.

In the near future though there will be even more alternative investments made all the more readily available by technology. Most of them already exist even if we’ve yet to see them blow up as popular opportunities – and most of them at least appear to be fairly risky propositions. Nonetheless, there are some alternative pseudo-investments we would expect to see young people gravitating to more in the next few years.

1 – Cryptocurrency

By the time of this writing, a few months into 2019, it’s pretty much universally accepted that cryptocurrency investment is a hit-or-miss prospect. Some got wealthy in the 2017 boom; others lost quite a lot of money trying and failing to ride the wave. And since the resulting crash, cryptocurrency has been difficult to project and, all in all, weaker. However, its long-term potential still exists, and seemingly as a result a report just a few months ago indicated that millennials are sticking with cryptocurrency. Right or wrong, many young people with money to invest appear to trust cryptocurrency not as a sure thing, but as a means of alternative investment moving forward.

2 – Startup Equity

It may seem lazy to suggest that Shark Tank, the popular CNBC show, might influence investing philosophies. At least among its American audience, however, and among young people who don’t want to buy stocks, it may be doing just that. We’ve seen a steady rise in apps and online platforms designed to help average people buy into startup businesses and products, either in exchange for favorable deals or equity. It’s a small-scale, independent form of venture capital investment, and it appeals to a lot of young people, even if it tends to be a very risky proposition.

3 – Betting Markets

Many would scoff at the very idea of listing betting in a piece about investment. However, because betting sites have migrated into U.S. markets as a result of the lifting of a federal ban on sports betting, it’s something to consider. This will represent a new opportunity for Americans, and it stands to reason that a lot of young people who will be exposed to related sites and apps, and who often have close ties to sports, entertainment, and politics (all of which have betting listings), will start making bets. This should not be looked at as something that is as responsible or predictable as market investment, but this isn’t about what’s strategic so much as what’s likely. We’ll at least see some treat this like an alternative form of investment.

4 – eSports

This category is a little more uncertain, and can almost be tied to some degree to the idea of investing in startup equity. However you look at it, the eSports industry is booming, with lots of growth potential remaining. Some expect it to be as big, widespread, and lucrative as the “major” American sports in time, which indicates that getting in now, in one way or another, could pay off in a big way. There are lots of ways to make money in eSports, from hosting or streaming events, to buying into companies and teams, to gaming yourself. Between them, it’s a safe bet that young people are going to devise new investment opportunities and chase them enthusiastically. Whether or not it’s a good decision is an open question at this point.

Is Buying a Racehorse a Worthy Investment?

It is easy to understand the appeal of horse racing. The sense of euphoria as your runner steadily moves clear of the chasing pack can provide an unbeatable rush of excitement, while the majority of race-goers also enjoy the social aspect of attending events such as Royal Ascot and the Cheltenham Festival.

Racing does tend to have a reputation for attracting the elite, but it’s entirely possible for anyone to buy shares in a racehorse and this provides a fun way of keeping an interest in the sport. We take a look at the pros and cons of investing your finances in a thoroughbred.

race horse

Source: Catterick Racecourse via Twitter

Why Invest?

Anyone who invests in a racehorse should be aware that this isn’t an instant money-making scheme. Purchasing a thoroughbred or joining a syndicate is far from a get-rich-quick scheme and investors are unlikely to see any return for at least the first twelve months, but the possibility of reward often outweighs the risk and there is always the possibility of long-term profit.

Flat racing horses are usually sold after three years in the UK and can often be purchased by owners in Hong Kong or Abu Dhabi. If a horse has enjoyed relative success on the turf, it may change hands for a handsome profit and this will then be split between the syndicate. Petrushka was a high-profile example of a horse who made a handsome profit for its owners when the filly was sold for £3.5 million back in 2001 (albeit an extremely rare example).

The Ups and Downs of (Co)Ownership

Owning or co-owning a racehorse can also be tremendous fun and many investors enjoy the chance to follow their horse around the country and watch it in action. If you have the money to invest, it can be a great opportunity to experience life as a racehorse owner and that will allow you overall say on its future. This involves being responsible for key decisions, ideal for the investor who likes a certain degree of control in exchange for the money they put up.

But it also means following procedures and that includes those for naming a racehorse – there are countless rules to which you must adhere. A horse’s moniker is very important and can occasionally affect its odds, especially in races such as the Grand National. Oddschecker says Rock the Kasbah is among the most backed runners in this year’s ante-post betting, having attracted significant early money from fans of The Clash. Owning a racehorse will require far more responsibility than simply joining a syndicate, so it’s a decision which isn’t to be taken lightly.

Flat or National Hunt?

Flat horses are generally more expensive to purchase but they do race far more frequently and the rewards can often be far greater. Although jumps racing has enjoyed a recent resurgence, the prize money available for flat contests remains higher and if successful, this can work in your favour. First-time investors are likely to find it more affordable to join a National Hunt syndicate. Syndicate members will get to visit the stables on a regular basis and be able to watch their horse in training. There is also the possibility of being able to enter the parade ring pre-race. These are the major perks of being part of a syndicate and are a huge part of the appeal for racing enthusiasts. The runners are also likely to remain in training for longer and as a result, embark upon more winning opportunities. However, it is not uncommon for hurdlers and chasers to take three-to-four month breaks at a time. If you purchase a National Hunt horse, don’t expect to see it race every weekend.

racing

Source: David Carr via Twitter

Costs

Unfortunately, there are numerous costs involved in purchasing a racehorse and it’s unlikely you’ll see any significant return on your investment for at least the first two years of ownership. The initial outlay can vary greatly, with costs ranging anywhere from £60,000 to £200,000, and its price tag will be largely dictated by its breeding.

Once the purchase is complete, there’s a number of annual costs to incur. In 2015, it was reported that the average annual cost of keeping a horse in training was £23,000, a calculation that excludes additional veterinary costs and race entry fees.

It can be an expensive past-time and that’s why the majority of first-time investors tend to dip their toe in the water by joining a syndicate instead. This takes the stress out of the ownership process and small-share syndicates can be a great place to start. Costs tend to start at around £99 per month but it is also possible to opt for a bigger share if required or desired. The bigger the investment, the greater the potential returns.

Anyone Can Sign Up

It is not uncommon for celebrities to invest in a racehorse with the likes of Lee Westwood, Ronnie Wood and Sir Alex Ferguson all having multiple runners in training over the past decade. However, syndicates are far from exclusive and anybody is able to sign-up. Many of these organisations pride themselves on welcoming investors from all backgrounds and it can be a fantastic way of experiencing ownership for a fraction of the cost.

Is it Worth It? 

There is no definitive answer to this question. If you’ve got the time and enthusiasm to invest, then it is an enjoyable way to spend some of your disposable income. Most syndicate members and outright owners do tend to be horse racing followers and it always helps to have prior knowledge of breeding, trainers and race types. However, this is not a pre-requisite and it doesn’t necessarily equate to success.

There is an element of luck involved with owning a racehorse and while there is no guarantee of a return on investment, there is always the faint possibility of co-owning a future Derby winner or even seeing your horse go-to-post in next year’s Randox Health Grand National at Aintree.

How to Judge a Mutual Fund’s Performance?

mutual funds

A mutual fund is a pool of stocks, bonds or other securities that has been divvied up into shares for an investor to purchase. Choosing a mutual fund that is expected to perform well and meet your expected goals is done by thorough analysis and research. The steps to judge how a mutual fund is expected to perform are:

  • Classification-

Firstly, classify the various funds available on the basis of your goals. If it fits your scope, keep it in for comparison with others, if it doesn’t chuck it out. Many companies offer the same type of competitive models of the same type of fund which can be kept in for comparison. Set one as a benchmark and compare others to it.

  • Historical Performance Data-

Collect data of the mutual funds that you have selected and want to compare. Several financial investment tracking websites like Morningstar provide data of the funds over the years along with tools that will help you in evaluation

  • Analyse the Data-

Now, compare the selected funds and their performance data on basis of different parameters. These parameters can include risk return trade off and match it with your own risk tolerance. You can also find rankings and ratings for different funds on historical returns and risk on the websites thus making it easy to compare.

  • Measure Consistency of Performance-

Then, try and look at the individual returns for each year rather than the average returns. Check which fund constantly returns more than its set benchmark. There are some funds that might have fallen tremendously for just one year which might have affected the average return rate gravely but that does not reflect the consistency of the bond. That counts as an anomaly. It could also go the other way around where in the average is affected positively by a skyrocketed price for just one year. Also compare the fund’s upside and downside data against its peer funds.

  • Look at Expenses-

Expense Ratio plays a vital role in the amount of return that you are able to extract from your investment. Actively managed funds might have a higher annual expense as compared to funds that charge a higher management fee. All these costs are to be taken into consideration to maximise the real time return that you get. Only by minimising cost can you maximise profit.

The above steps if followed properly and carefully are sure to help investors in mutual funds to choose the perfect option suited to their goals. But care must be taken as to the nature of the bond and its consistency. After all, shares are nothing if not unpredictable.

How to Invest in Property with a Low Budget

real estate investment

Property investment is no longer just for the very wealthy. It can be a great way to save up for the future and it can be more affordable than you might have assumed. By being savvy and thinking outside the box, property investment can be an option even on a low budget.

Choose an Area on the Rise

Properties in areas which are yet to experience the benefits of extensive investment can be a great way to get value for money in property investment. Plans for regeneration and investment can easily be found, allowing investors to buy properties that are going to increase in capital appreciation. It may seem odd to buy a property in an area that currently has a less than perfect reputation, however these are often the chosen location for developers, due to the amount of available space and the lower cost of land. As the number of pristine high rises and new business spaces increases, so does the value of residential property. The future Wirral Waters development in Liverpool will completely rejuvenate the region, and affordable property investment there should increase in value exponentially. This kind of ambitious project is transformative for a region, attracting both new residents and new opportunities. Property investors on a low budget would be wise to consider areas earmarked for future investment and take advantage of the current lower price points.

Look Slightly Further Out

By looking slightly outside the city centre, investors can get far more for their money which is essential when investing with a lower budget. UK cities are rapidly expanding and areas on the outskirts are increasingly becoming city centre locations. Manchester is a perfect example of this, with areas like Salford Quays and Ancoats being totally transformed by new developments and increased investment. Not far out of the city centre, improved transport links make these locations perfect for young professionals. The demand for buy to let property in city centre locations is incredibly high, so looking at a map and moving your target area can pay off in the future.

Look at Student Accommodation

Purpose Built Student Accommodation can be a great investment for lower budgets. This lucrative sector offers great return on investment, with yields up to 8%. Investors can purchase a student apartment for as little as £45,450 from expert property investment firms like RW Invest. The student sector is booming, with the demand for accommodation far outweighing supply. In 2017 there were 2.32 million students living in the UK, making up a significant percentage of the population. International students are also coming to the UK in greater numbers, and are often looking for high quality, modern accommodation. With this record volume of students, the demand for purpose-built student accommodation has never been higher, providing investors with valuable opportunities for profit.

Think Small

Property investment doesn’t have to be an entire house. There has been an increasing rise in demand for rental property everywhere in the UK, with a fifth of households now leasing from a private landlord. With such a large increase in the number of renters, smaller spaces like one-bedroom apartments and studios are becoming highly sought after. Studio apartments are a far more affordable investment property. Many young professionals are happy to sacrifice space for a great city centre location and studio living has become increasingly popular. The quality of studio apartments is also far higher than it has ever been. New developments now commonly incorporate studio flats into their plans, with features like on-site gyms, parking spaces and high-speed internet as standard. The increasing demand for studio apartments will see their value rise, making them a great investment for capital appreciation.

Some Rules to Know about Retirement

Retirement planning

Retirement is one of the most uncertain periods of your life. There is just so much suspense. You have no idea about what you going to do. Though you already know the time of your retirement, you are just clueless about the easy you are going to spend your time or actually earn. this is why it is a very tricky period and people have been known to just go into depression because of the sudden change in lifestyle. This is why you must read ahead to find about some of the golden rules about retirement. This will not make you go any younger but it will definitely help you to plan from now and also better.

  1. Invest till you are able to earn: This is one of the best things that you can do. You must always invest. There are a number of investment options that are available for you in the market. It is true that most of these investment options come with the factor of risk. However, this is why it is recommended that you invest little by little. This way, you do not lose much in case of a loss and actually get profit when the time for you is good and your choice is wise.
  2. Start something from home: Next, you must plan for working from home. There are a number of jobs such as writing and other tasks that you can do form home. This is not as well-paying as a full-time job but it is definitely great for you. in fact, you can also start another business by following a fashion such as cooking or gardening. There is immense demand for it. One of the most recent things that people are taking up extensively in organic farming. This can help you earn for yourself and you will not have to depend on anyone else.
  3. Save when nearing retirement: When you are young, you tend to spend a lot. However, this needs to be controlled faster a certain time. Spending excess at any given point of time can be detrimental for you because you do not know when misfortune may strike. But, that does not imply that you start living in fear and actually give up your enjoyment at the present. This is why, when you cross 40, you must start saving for retirement. This is a good time to calm down and enjoy life as well as think about the future that is to come.
  4. Do not touch your emergency funds until needed: Last but not the least, it is one of the personal financial goals for people to save funds for emergency. These are situations that can just pop up any time without any warning in advance. This is why you must always save your emergency for such a situation only. As you grow older, you tend to fall sick more often and your immune system weakens. This is why you should not use your emergency funds for anything else.