Using a long term strategy to decide how to invest in stocks is a great way to build wealth. This process eliminates watching the day by day market swings and allows investors to concentrate on the big picture. The program also permits the best allocations of assets between three groups. These groups are steady growth, semi-risky ventures and if it works out, I can retire early projects. What counts with this investment strategy is growth over time.
Most of the investment will be in this category; at least 70 to 75% of the money should be invested in safe stock. Corporations with proven track records of development are wise choices as long as the companies retain the same management and quality. As people age, they need more health care and help; pharmaceutical and other life extending industries will continue to thrive as they find ways to help people live longer and better.
Some industries do very well during recessions like repair parts for automobile, beauty supplies, contraceptives and less expensive fast food. Because people are keeping vehicles longer, they repair older cars and trucks. An inexpensive way for a woman to pamper herself is to try a new shade of fingernail polish, perfume or makeup. Babies and kids are expensive; contraceptive sales go up during recessions. Although people are cutting back on dining, they are still eating at inexpensive restaurants and fast food places; expensive nightclubs are losing clientele.
Favorite products are another way to forecast corporate profitability. If someone tries a new inexpensive cleaning solution, discovers that works on almost everything and has a lot of friends using it, that company is worth investigating as a potential investment. Some people watch what children want; these individuals remember the Rubik’s cube and Cabbage patch dolls phenomenon.
Up to 15% of the investment account can be allotted to these higher risk, higher reward products. Startup companies with exciting products may become profitable and pay stockholders for their faith. Consumers worried about human impact on the planet want eco-friendly products and renewable resources.
No more than 10% of the account should be allocated to these ventures. Investing money in stock for a goldmine about to be dug in a foreign country, an oil well to be drilled in Idaho or Uncle Sals new cookie factory is as risky as betting on the horses. If the project makes money, the return will be fantastic. However, the odds are the investor only gets a worthless piece of pretty paper for his or her money.
Investing in stocks is much easier and safer as a long-term strategy. This investment plan is less stressful for stockholders as their well-being does not depend on the latest stock price. With this approach, most of the account is only reviewed annually or semiannually to make sure it is performing as desired. Semi-risky products are checked more frequently and disposed of when warranted. The extremely high risk 5 to 10% stocks are tucked away for years.