Strategy For Smart Investors

Written by admin on September 19th, 2011

The recent economic slump has proved disastrous for many investors and have left many of them bankrupt. Now the question arises that can it be avoided in such a turbulent time? The answer is “yes” it can be avoided with right strategy of smart investing. Smart investors do not do anything great, they coin the right strategy and follow it without getting perturbed with market fluctuations to harness the optimum benefit. The right strategy for smart investors is to make good, solid preperation to withstand market turbulence by applying innovative as well as calculative strategy in place of basic investment principles followed by most of investors. To make this point clear, I will quote one of situations that is often witnessed in the financial market. It is seen that most of investors sell their investment when its price is rockbottom following the basic investment strategy.

This results them in getting locked in losses and they find themselves in such an awkward position that they could not benefit from rebounding stock prices in the case of market upward swing. But the smart investor will not do so, he/she will go for more investment when the price is rockbottom instead of selling and will wait for the market turnaround.

The right strategy for smart investors is to keep into consideration the fact that stock market crash is more of a routine thing, but despite various crashes it has overall upward growth, which averages roughly 10% a year. So investment in stock is always going to prove beneficial in long run. But investment should always be done taking into account your asset allocation, time left in your retirement and your toleration potential of abrupt price swing.

Based on these factors you should devise your strategy for long term or short term investment. As per the right strategy for smart investors you should never be impatient seeing the market’s peak and valleys and should keep your strategy on track of maintaining sound investment plan.

It is often seen that people go for extensive market research and they take their investment decisions on the basis of news about latest happenings in the market. But it’s not a wise decision to do so, according to right strategy for smart investors. It’s good to be abreast with the latest happenings in the financial market but you should be rather concentrating on your investment goals and the strategy that you have devised for your investment rather than on day to day market movement. If you want to make changes in the investment portfolio you should do it in a thoughtful way and should consult with your financial advisor before taking a plunge. Diversification of your investment is considered one of the best strategy for smart investors. Diversification of your investment among different investment classes would lessen your risk in the case of market downturn. In place of stocks, you can even diversify your investments in bonds and money market funds that will give you more security.

Apart from all the above mentioned factors, there are certain other things as well that should be kept in mind as per right strategy for smart investors. You should also review your personal situation annually and based on your evaluation you can take the decision of rebalancing your investment portfolio or could even consider increasing your contributions. But you should never try to time the market because owing to its unpredictability you could run into huge losses. If you make your investment decision based on these strategies for smart investors, you would be even profiting when the market is going through turbulent time.

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