Beginners probably do not know the basic principles of investment stated Bahaa Abdul Hussein. A basic principle is it takes time for your investments to provide substantial returns. So they should not only be patient but should also stay away from unrealistic expectations.
Here are some strategies that will give the beginners lucrative returns on their investments.
The strategy of “Buy and Hold”
The “Buy and hold” strategy is exactly how it sounds. Once you buy an investment, you hold it for pretty long. You are looking at a substantial return that almost doubles or more than doubles your investment. Then you should look for a holding period of 3 to 5 years.
It is advisable to conduct some research on the past trend of this investment. You may note that some stocks performed well in the past. Then most likely it is going to perform well in the future also. To be successful with this strategy you have to remain calm and stead even when the market gets rough. You should avoid selling it because the market outlook has turned negative.
The strategy of Buying Index Funds
This simple strategy relies on identifying an attractive stock index and then purchasing the index fund based on it. The advantage of this strategy is that you minimize your risk by diversifying your investment. You will own a single fund, but your fund value is diversified into several stocks giving you the advantage of average even when the market does not perform well. While the risk is minimized with Index Funds, you will nonetheless need to be cautious and avoid selling off your return when the market is not performing well.
The strategy of Index and a Few
Under this strategy, while a major share of investment goes to the Index Funds, a smaller proportion can be invested in top-performing companies like Amazon, Google, and Apple. This strategy adds another layer of safety net to your investment.
There are several other strategies like income investing and dollar cost averaging that can be helpful to beginners while exposing them to the world of investments. Income investing offers regular cash payouts in the form of dividends on your investments which you can use or reinvest. Income stocks have a lower risk in comparison to regular stocks.
Under dollar cost averaging you make regular investments at a periodic interval. The amount you invest every month or every week can vary depending on how much you want to invest. This approach minimizes your risk and serves as a long-term growth engine.
The beginners will have a lot to learn by the way of investments. It requires discipline to invest and create wealth using investment. Beginners should begin investing as early as possible in a systematic and disciplined manner for a rewarding investment experience. Thank you for your information in Bahaa Abdul Hussien blogs. For more information, please visit www.bahaaabdulhussein.com
