Strategies for those with money to invest
While there are many individuals who have plenty of money to invest, more than a few hesitate to do so because they are unsure of exactly how or where to invest their money.
And while it may seem a logical conclusion that the more money you have the more complicated your investment picture becomes, that is not necessarily the case. Financial investment strategies can still be broken down into simple, easy-to-understand terms.
• Asset allocation — One of the most important elements of a successful financial strategy is proper asset allocation. This refers to the mix of investments you have in your portfolio, and it’s important to keep a good balance of different types of investments — like stocks, bonds and cash, for example — diversified across a range of industry groups or sectors.
Your ultimate financial objectives, the amount of time you have to invest and your own risk tolerance should all be taken into consideration as you decide exactly how to divide up your funds and where to invest them.
Although asset allocation will diversify your portfolio, it will not protect against fluctuating prices or uncertain returns.
• Equity investment strategies — When investing in stocks, a good rule of thumb is to diversify your stock portfolio across a number of sectors; you may also want to overweight industry sectors whose stocks you believe are likely to benefit from the current outlook for the economy. Once you have identified these sectors, you can begin to select specific stocks from within them.
You may want to consider stocks that pay dividends, which can give your investment an added boost.
Another benefit of these stocks is that you can usually reinvest the dividends you earn directly into the purchase of more stock, and many investment firms even have programs that allow you to do so at no cost.
Another good idea is to select companies that have a solid foundation and have the potential to continue to grow over the long term. While it’s not easy to predict the future, the advice of a financial advisor and a little research of your own should enable you to identify companies that have the qualities necessary to meet your long-term objectives.