Top Investment Strategies to Add to Your Portfolio
Are you ready to revamp your portfolio in the new year? With the Middle Eastern markets beginning to recover and show promising returns for investors, now is the perfect time to rework your investment strategies. In this blog, we’ll focus on the top four investment strategies that you might want to add to your portfolio.
Growth Investing
Growth investing focuses on building your portfolio’s value through assets that increase in value. This type of investment strategy moves away from focusing on dividend yield and looks to add assets that have upside potential.
For example, let’s say you bought 10 shares of Apple on December 2, 2022, when the share price was $147.81. Just one year later on December 2, 2023, the share price was trading around $191.24. This is a 29% return on investment just by purchasing the right stock at the right time.
Growth investing doesn’t mean that you need to hold the stocks long-term. In fact, many growth investors hold the stock until they’ve achieved a certain growth percentage. Then, they sell and look for their next big-ticket item.
Diversification
Diversification is the process of investing in multiple different asset classes to avoid a total loss. Proper diversification can help you avoid inflation and other market risks. Let’s say that you are heavily invested in technology startups in the Middle East. What happens if the Middle East shifts its focus to housing? Will your portfolio lose its value?
Effective diversification not only looks to diversify the industries you are invested in, but it also seeks to spread out the location of your investments. This might look like holding international ETFs and having different investments in industries like real estate, technology, healthcare, energy, and more.
Buy and Hold
Buy and hold is a tried and trusted investment strategy. The historical return on stock investments is around 10%. However, this doesn’t mean that each year you will enjoy a 5% investment. In fact, the return on investment you see each year can drastically change.
Take 2021 for example. The average return on investment was a double-digit negative. If you were to sell a stock you paid $100 for in 2020, you might only receive $90. A buy and hold strategy looks to purchase investments and hold them for years to avoid swings in market returns.
Income Investing
Income investing is another top investment strategy to consider adding to your portfolio. This strategy analyzes the expected income you will receive each year. Most stocks pay out a dividend each quarter. Finding top-paying dividends can help you grow your portfolio through received income.
When it comes to income investing, you want to be sure you are choosing stocks that pay an increasing dividend yield compared to the share price. You might see that a company’s dividend yield increased by 5%, but if the price to purchase the stock also increased by 5%, you aren’t making a higher return.
Summary
Which of these investment strategies can you add to your portfolio? You might benefit from including multiple strategies in your portfolio to maximize your returns. For more investing tips, tricks, and information, check out our other blog posts.
