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Each time you hear the word investment, i know business , more money, more income, will surely come to your mind. Investment can be short term or long term investment. In all it depends on the investor to choose how long he want the investment to stay. One can invest in crypto or really estate or with trusted companies.
You may also gain from your investment or lose your investment. All is as a result of where you invested your money or whom you trusted your money with. Am sorry to say that most investors do not make necessary enquiry before investing their hard earn money and some times, it turn out to be a disasters. In this post we are going to see 3 investment Strategies.
- Diversification
- Asset allocation
- Risk management
Let's now take it one by one. But please note you the investor reserve the the right to choose the strategy that will work for you.
Diversification : As a business Man, diversification will help you to manage investment risk. Is is said that it is not good to put all your eggs in one basket. Diversification is a way to invest your money with different companies not just one. In case something happens to one you can still move on with others.
Another way is to sell different products as a business Man. Let's say your company is into selling of car. Diversification can play a vital role there. That is to include other businesses like selling car parts, car oil etc. You have different ways of income now. If you don't sell car today, you will sell car parts or car oil.
Important of diversification
It is said that no one knows tomorrow. That is you don't know what the future holds for the company you are investing with. It may collapse tomorrow. Research has shown that all who are focused in investmenting in just one company do not really do well compared to those who invest in different companies.
Let me use #Hive as an example of this . We have different token on hive which you can invest in. One can choose to invest only on #HBD. The truth is that you will not lose money instead you will gain 20% ROI from the investment. Let's say your total investment is $30,000. You will get 20% of it.
Now another investor decide to divers in his own investment using that same $30,000. He now invest $10,000 in HBD, $10,000 in #hivepower and $10,000 in #leopower. Remember the capital is the same but i tell you, if you keep this 2 investment strategy for 5 years without removing 1 Kobo. The second investment that is in 3 different token will have more ROI than the first one.
This is because, the person will earn curation reward from hive power and curation reward from Leo power. You can see that diversification in investment is important. Let's now go to second strategy.
Asset allocation : Asset allocation is your decision. No one will do that for you as an investor. You can choose to invest just on real estate or in crypto. Remember asset allocation means to divide your investment in different asset. Now that you have choosed where to invest. You have to know how long you want your investment to stay. For example, if you want to fix your money in the bank, there is always an agreement on how long you want to fix it.
That is always the same with investment. You choose to make it short term or long term investment. In finance, it is always good to make your investment long term investment because it has a lot of advantage.
Why is asset allocation important.
I will answer this with what we have now on Leofinace. At the beginning of this year, many of us set up our Leo goals, hive power goals and so many 2 layer tokens on hive for 2023. Mine was 5klp, 2khp, 10k AP, 20kNP and much more. One of my reason to set this goal is because I want financial stability. Secondly #leofinace has a goal of helping all those who meet up with their personal leogoal come 2024. You know what that means right.
When you allocate your assets. It helps you meet up your financial goals. It also help you to know which of your investment that is bringing more income so that you invest more on that or take from it for more investment. An investor should be alert to know what is happening to his investment. Asset allocation can change so you are the one to tolerate the risk. That brings us to the last strategy that is.....
Risk management : There is no investment without risk. But learning how to identify risk will help an investor to invest wisely.
You must have access to your investment.
You must have control over your investment.
You should check out the security level of the company you are investing your money with.
You should not think that all is well, nothing will happen.
Something can happen and you lost your money .
You should think of natural disasters.
All this are things to know to prepare you in case something happens to one of your investment.In investment, you are managing risk not because you don't want any risk investment . But because you want to know some risk that worth taking and the one you can avoid.
Risk management is much more important now than before as many companies are collapsing and many big businesses are losing it big time.
Conclusion
In investment, this 3 strategies i mentioned above are very very important to consider when thinking of investment. And consider questions like.......
- Who is behind the company?
- How strong is the company and what they can offer.
- How much am I ready to risk?
- Should i lose this money, will i run into debt?
disclaimer Please note that this is not financial advice. You take role responsibility of your investment. (DYR) as you stand on the best position to take your business and your investment to where you want it to be.
Posted Using LeoFinance Beta