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Seven simple investment strategies to make steady returns

Discover simple investment strategies that can help you achieve your financial goals and build long-term wealth with ease.

A well-defined investment strategy is crucial for success. The importance of having a clear investment strategy cannot be overstated. Without a clear investment plan, investors are more likely to make emotional decisions and follow short-term market trends.

As a result, they are more likely to suffer losses in the long run. In this article, we will discuss seven simple investment strategies that can help investors make steady returns in the long term. 

1. Dollar-cost averaging

Dollar-cost averaging is an investment strategy that involves investing a fixed amount of money at regular intervals. It’s probably the simplest strategy of all. This strategy helps investors avoid the temptation to time the market and try to buy at the right time. With dollar-cost averaging, investors invest a fixed amount of money in a particular investment, regardless of whether the market is up or down.

Also read: Make more, spend less – 5 steps to wealth generation

This approach can help investors reduce their overall investment cost, as they will buy more shares when the price is low and fewer shares when the price is high. Over time, this can average out the cost of their investment and reduce the impact of market volatility on their portfolio.

For instance, suppose an investor wants to invest $5,000 in a stock. Instead of investing the entire amount at once, the investor can choose to invest $500 each month for ten months. By doing this, the investor will end up buying more shares when the price is low and fewer shares when the price is high. This will help reduce the overall cost of their investment and provide them with a more stable return over the long term.

Dollar-cost averaging example, source:

2. Buy and hold

Buy and hodl is a popular investment strategy that involves buying stocks or other investments and holding them for an extended period. The longer, the better. This strategy is particularly useful for investors who want to avoid short-term market fluctuations and focus on long-term gains. By holding onto their investments for a long time, investors can benefit from the compounding effect of their returns, which can help grow their portfolios over time.

The “buy and hold” strategy is based on the principle that over the long term, the stock market tends to go up, despite short-term volatility. Therefore, investors who hold onto their investments for an extended period are more likely to benefit from market growth and earn steady returns. That’s exactly why Warren Buffett is so wealthy, investing for over 70 years. 

However, it’s essential to note that this strategy requires patience and a long-term investment horizon. Investors who adopt this strategy must be prepared to weather short-term market fluctuations and resist the temptation to sell their investments during market downturns.

S&P 500 historical chart, source:

3. Value investing

Value investing is a long-term investment strategy that involves buying undervalued stocks and holding them for a longer time period. This strategy is based on the principle that the stock market tends to undervalue companies in certain cases. For example, the price-to-book value (P/B) indicator is a great way to see whether the stock is overvalued or undervalued.

Value investors look for stocks with a low price-to-earnings ratio (P/E ratio) and other financial metrics that suggest the stock is undervalued. Value investors believe that the market will eventually recognize the true value of the company and that the stock price will increase sooner or later. 

This strategy requires patience, discipline, and a long-term investment horizon. Value investors must be prepared to wait for the market to recognize the value of the stock, which can take several years. Warren Buffett is known for being the best value investor in the world. A lot can be learned by reading about him. 

Warren Buffett, source:

4. Growth investing

Growth investing is a long-term investment strategy that involves buying stocks of companies that are expected to grow at a faster rate than the overall market. Growth investors look for companies with strong earnings growth potential, innovative products or services, and a competitive advantage in their industry. 

Growth investors are willing to pay a premium for these stocks because they believe that the company’s earnings growth will eventually drive the stock price higher. This strategy requires investors to have a long-term investment horizon, as it can take time for these companies to grow and realize their full potential.

Examples of these kinds of companies might be Uber, Airbnb, Coinbase, Spotify, and last but not least, OpenAI’s ChatGPT (it’s not publicly traded yet). 

5. Dividend-oriented stocks

Dividend stocks are the kinds of shares that distribute a portion of their earnings to shareholders in the form of dividends. This strategy can provide investors with a steady stream of income, which can be reinvested in the stock or used to fund other investments. 

Dividends are usually paid out quarterly, semi-annually, or yearly. Dividend-paying stocks are often from stable, established companies that generate consistent earnings and have a history of paying dividends. 

This strategy can be an excellent option for investors who want to generate income from their investments without relying on market growth. Some of the most popular dividend stocks in the world are Coca-Cola, Johnson & Johnson, or Procter & Gamble

6. Asset allocation

Asset allocation is an investment strategy that involves diversifying an investor’s portfolio across different asset classes, such as stocks, bonds, and cash. This approach can help investors manage risk and maximize returns by spreading their investments across different asset classes with different risk and return characteristics. The high degree of diversification in this approach makes the overall risk relatively low.

Read more: Why should you start investing right now?

Asset allocation involves choosing a mix of assets that align with an investor’s investment goals, risk tolerance, and time horizon. Investors can adjust their asset allocation over time to reflect changes in their financial situation and investment goals.

7. Socially responsible investing



Socially responsible investing chart, source:

Socially responsible investing (SRI) is an investment strategy that involves investing in companies that align with an investor’s values or beliefs. This approach can be an excellent option for investors who want to make a positive impact on society while earning a return on their investment. 

SRI can also be a useful tool for diversifying an investor’s portfolio, as many socially responsible funds invest in companies across various sectors. SRI involves investing in companies that operate in a socially responsible manner and have a positive impact on the environmental, social, or governance (ESG) factors. 

Since the world has started to put more emphasis on global warming and other similar problems in our society, ESG funds have been on a roll. SRI investors consider not only financial returns but also the social and environmental impact of their investments.

Bottom line

Investing can be an excellent way to build wealth over the long term, but it requires a clear investment strategy. These four investment strategies are simple and can help investors make steady returns over the long term.

However, investors must remember that investing always involves risk, and they should consult with a financial advisor before making any investment decisions.

I got into financial markets by accident in 2012 and started with Forex trading. Later in 2017, I started investing in stocks in cryptocurrencies and began writing articles profess...


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