How to create your own investing strategy

Here’s how to create the best investing strategy along with tips for choosing the right asset allocation and becoming a successful investor.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

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Creating your own investing strategy may sound like hard work, but we’re going to help make it easier for you. Choosing a strategy with an asset allocation that suits you and your goals is a vital part of your investing journey.

Read on to find some tips on what you need to do to create the best plan for you.

What is an investing strategy?

Recently we looked at a few different types of investment strategies.

Some of the most popular strategies include:

Here, we’ll go one step further and talk about creating a strategy that will suit you and your goals.

It’s important to remember that everyone is different and so it makes sense to have your own distinct plan of action.

What’s the timeframe for your investing strategy?

How long you plan to invest for should be a key consideration when you’re getting started.

If you’ve got a long investing lifetime ahead of you, this can mean that you have more options. With time on your side, you may have the ability to ride out any bumpy periods which might allow you to consider riskier equity investments. These put you at a higher risk of getting back any funds you invest, however they also potentially provide higher rewards.

On the other hand, if you have a shorter timeframe in mind or retirement plans on the horizon, you might be better off with lower-risk investments like gilts and bonds that are more secure but generally offer a lower return.

What’s your attitude towards risk?

How much risk you’re willing to take will impact your investing strategy.

Over your investing lifetime, your appetite for risk may go up or down, and that’s okay. What’s important is that your initial strategy reflects what you’re comfortable with. Don’t worry about what everyone else is doing.

Often, taking on more risk can result in more reward, but that’s not always the case. It’s better to have a solid investment plan and an asset allocation you’re happy with. Stick with it and don’t take on lots of risk just because you think that’s what you’re supposed to do.

That said, many people view investing as much riskier than it actually is. This fear keeps a lot of people out of the market.

How involved do you want to be?

When developing your investing strategy, you’ll need to consider whether a passive approach or an active approach will suit you best.

Passive approach

If you want to invest with the least amount of effort, taking a passive approach could suit you. Although there are some risks to passive investing, this can be a great way to just let professionals choose your investments for you.

Creating a diversified portfolio of index funds or managed funds can be helpful to your plan.

Active approach

If you want to be more involved and think you’ll enjoy the process of researching and choosing all of your own investments, although you will miss out on the advantages of having your decisions made by experienced professionals, taking an active approach might be a better option as part of your strategy.

What’s the easiest way to manage your portfolio?

Whether you take a passive or active approach, you’ll still need to do some occasional portfolio management to make sure you’ve got a healthy asset allocation.

One of the best ways to do this is to use an investing app that lets you easily track your progress at your fingertips.

How do you prepare yourself?

With investing, knowledge and the ability to manage your emotions are the keys to success.

It’s important to try and stay emotionally detached when working on making money with your investing strategy.

The market is going to go up and it’s going to go down. If you begin your investing journey with a clear mindset and a cool head, whatever approach you take is likely to be more successful.

No matter what the strategy, investors who panic and act out of emotion during a market crash usually get swept away and end up losing money.

The market often rewards those who are patient and don’t buckle under pressure or follow the crowd.

How do you get started with your investing strategy?

Once you’ve chosen your strategy, the next step is to actually start investing.

Different platforms suit different types of investors, so we’ve worked hard and researched some! Check out our top-rated share dealing accounts to find one that’s good for you.

If you’re looking for a tax-efficient account, then you may want to invest through a stocks and shares ISA. Whatever your strategy, using one of these accounts could benefit you massively in the long run.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

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