Welcome to my article about 7 types of investment strategies you can do online.
Investing can be intimidating for some, but it doesn’t have to be.
There are many different strategies that you can do online and in your spare time. In this blog post, we will discuss 7 of them:
- Stocks
- Bonds
- Mutual funds
- ETFs (Exchange Traded Funds)
- Options trading
- Futures trading
- and investing with a Robo-advisor service.
Each one has its advantages and disadvantages so make sure to read on before deciding which strategy is best for you!
What Is An Investment Strategy?
An investment strategy is any way in which people use their money to make more money.
There are many different ways that you can do this, from stocks, bonds, mutual funds, ETFs (exchange-traded funds), options trading, and futures trading.
A Robo-advisor service also falls into the category of investing strategies because they offer investors help in making financial decisions for them based on risk tolerance levels and individual needs.”
Investing differs greatly from person to person, so it’s important to know the different options and how they work.
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Why should I invest in a strategy?
There are many reasons why you might want to consider investing, and it all comes down to your goal.
Do you need the money for something that is happening soon like a new car or an engagement ring?
Are you saving up for retirement or college tuition savings? Is there some other reason that will motivate you more than anything else does right now?”
Your goals could be big, small, short-term, long term – but whatever they may be make sure they’re motivating enough not only to get started with investing but also to keep going!
7 Types Of Investment Strategies You Can Do Online
Here are 7 types of investment strategies that you can get started with online.
1. Investment Stocks
Investment Stocks have been around for centuries and they’re an investment that’s bought from a corporation through buying some percentage of their business on the stock market. (If you buy 100 shares, then you own .01% – or one-tenth – of that company).
The idea behind it is to make money off what happens with those companies when people start investing in them which means if they do well, your share will also do well!
If not, then this can lead to losses.
Pros
The pros with investment stocks are that it’s possible for you to have an income stream from something like dividends or interest, and the stock market can also provide capital gains.
Cons
Losing money through a stock is one of the cons associated with this type of investment strategy, but there are other risks as well such as fraud, insider trading, company scandals that could impact your share price!
2. Investment Bonds
An investment bond is somewhat similar in theory but this time instead of buying stock from a corporation as we did with stocks, we’re lending them money for a set period of years so they can grow their business or start something new.
The terms are set beforehand (the maturity date) which means there’s no risk on our end when they decide to pay us back early – because all along those were predetermined!
Bonds tend to be more stable than stock investments because there is less risk of the company going under.
Pros
Some of the pros of Investment bonds are that it’s more stable than stocks because bonds are backed by the company that issued them.
It’s also a less risky option which means if you have any money to invest, this is better for long-term investments (like retirement).
Cons
Some of the cons about investment bonds are that there’s not as much upside potential and some bonds are more complicated than stocks, so this might be better for someone who has a little bit of experience in the market.
The most important thing to remember about investment bonds is that they’re less risky because you know upfront how much money you will get back at the end of its term (the maturity date).
Also, it’s quite stable which means if your retirement accounts aren’t doing well then maybe an investment bond could help balance out other investments – but just make sure you do your research before investing anything!
3. Mutual Funds
Mutual Funds are a type of investment fund that includes more than one company, often dozens.
This means you get to own shares in many different companies at the same time without having to buy each individual share yourself and it’s done through just one purchase!
Mutual funds also allow for diversification which is important because if one or two stocks take big losses then your mutual fund may not be affected as much.
Plus, investing in this way makes it easy to track what you’re invested in – all with just a single statement from the fund itself.
Pros
- Incredibly low risk and diversification – Mutual funds are more stable than stock investments because there is less risk of the company going under. You also get to buy into many companies at once so your money isn’t tied up in just one place where it could go down if that company takes a hard hit.
- Easy tracking and management with only one statement from the fund itself – When you invest through mutual funds, all of your buying power goes into the same account which means you have only one document to track instead of numerous individual stocks or bonds. Plus, those who manage this type of investment can do things like monitor performance or make adjustments on behalf of their investors without needing for them (the investor) to worry about what to do next.
- Easier for small investors to diversify their portfolios – If you’re just starting out with investing, mutual funds can be a great way to make sure your portfolio is as diverse and safe as it should be while also giving you the freedom of having an advisor in charge who will know what steps need to be taken instead of doing everything on your own.
- Lower cost than other types of investments – Mutual fund fees are typically lower because they give people access to professional money management services without charging them too much up front or ongoing for that expertise.
- Less pressure from day trading deadlines – When you work with stocks, bonds, or commodities there’s always the threat that a stock price might change during the period between when you buy it and when you sell it, which can make things more stressful. Mutual funds don’t have that same pressure since they’re traded like stocks but are priced at the end of each trading day so there’s less risk for investors who want to take their time with investment decisions.
- Accessible investments for people in all income brackets – You might not be able to invest a lot upfront if you only earn a low wage or don’t even have any money saved yet, but mutual funds give everyone access because they’re available through traditional brokers as well as online platforms.
Cons
- It costs money upfront before any earnings can come back so there’s no guarantee of profit and interest rates on bonds tend to exceed those on stock investments making them cheaper to hold.
- Mutual funds also have some fees and minimums associated with them which can be a drawback for those who are just starting out investing.
- Lastly, if you invest using a traditional mutual fund then it’ll typically offer more diversification than ETFs which mainly focus on stocks, but the downside is that there may not be enough information to help you make decisions on what stocks are worth investing in.
The Bottom Line: Mutual funds offer a great way for investors of all types and levels to get started with any kind of investment strategy, but there’s an inherent risk involved which means that they’re not the best choice for those who want more control over their investments.
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4. ETF’s (Exchange Traded Funds)
ETFs are a type of mutual fund that is composed of a group of stocks.
They are traded on the stock exchanges, just like any other company shares – hence their name “Exchange Traded Funds”. This makes them easy to buy and sell in different quantities without affecting the market price. It also means they can be sold short or bought on margin (borrowed money).
Pros
Some of the pros of ETFs are that they can be traded during the day, like stocks. They also typically have a lower expense ratio than traditional mutual funds.
Cons
Some of the cons to ETFs are that they are subject to the same risks that stocks can be when trading, which means that they’re not the best choice for those who want more control over their investments.
5. Options Trading
Options trading is when a person purchases the right to buy or sell an investment at a certain point in time.
This means that they are buying into what’s called “a call” or “put”.
A call is the right to buy, and put is the right to sell.
Pros
One of the pros of options trading is that it allows people to trade stocks without having 100% ownership, which makes them more affordable for many investors.
They also come with lower barriers to entry and higher profit potentials than other types of strategies because they’re generally not subject to capital gains tax.
Some enjoy the leverage aspect – meaning you can make investments on margin using borrowed money (although this may require experience).
Another pro here is that there are no long-term commitments required and these could be good for people who are worried about stock market volatility, which they could use as a hedge.
Finally, with options trading, you can do short selling – meaning that when the price of an asset falls below your purchase price (plus any fees), then it’s possible to sell and make money on the difference.
Cons
The one con here is that there is no guarantee prices will increase like with stocks or ETFs because these need time for the buyer to exercise their right at the expiration date.
Options investing also requires more understanding than other types of investments – such as reading charts and graphs for trends/patterns and studying performance history before deciding what type of strategy might work best in different situations.
This means that investors may have less control over the process than with other types of investment.
6. Futures Trading
Futures trading is a type of investment where an investor buys and sells agreements to buy or sell something at a predetermined future date.
These contracts, which are traded on the futures markets, can be bought for any length of time with various durations including up to 12 months in advance (though most usually expire within nine).
Futures traders may also short-sell these contracts if they think prices will decrease before contract expiration.
Contracts are for a predetermined amount of time and, when that contract expires, the investor has to decide whether or not they want to buy another one before prices increase or decrease again.
Pros
Futures traders may also short-sell these contracts if they think prices will decrease before contract expiration.
Cons
Investors need to be able to predict what prices will do at a future date.
They’ll typically need about $25,000 to get started trading futures because there are initial deposit and margin requirements that can’t usually be met with cash alone.
There is some risk associated with this strategy – while it’s unlikely for you to lose your whole investment on one trade, all losses above those deposited within margin accounts must come out from your pocket.
But fortunately, stop-loss orders are permitted by many brokers so investors should always have protection against downside price fluctuations.
7. Robo-Advisors
A Robo-advisor is a service that provides automated, algorithm-based online investing advice.
It’s software rather than an actual person and it can be accessed through any internet browser or device.
Robo advisors are best for more conservative investors who want to get started with investment planning quickly without the hassle of excessive paperwork and high management fees charged by traditional financial planners.
They offer low-cost services because they don’t usually have salaries, brick-and-mortar offices, or storefronts like human advisors do so you end up paying less in total expenses even if your account balance is substantially higher than $25K+.
Pros
Robo advisors offer low-cost services and there are no minimums or account balances required for most Robo advisor plans.
Some of the other great features include automatic rebalancing, regular portfolio reviews, automated tax loss harvesting (the practice of selling securities that have experienced capital losses to offset any realized gains), retirement planning tools, access through your phone or computer with an internet connection – so they can work well as part of your overall investment strategy.
Cons
Robo advisors are not a replacement for an advisor who is planning to retire.
You’ll still need human advice in some areas of your life, such as tax issues and estate planning.
They also don’t offer access to mutual funds or ETFs that you can buy through a financial adviser with their company-sponsored 401(k) plan – which might be either beneficial or inconvenient depending on how they invest the $0-$500+ per month into the account (i.e. if there’s no automatic rebalancing).
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What Is A Great Investment Strategy For Beginners Investors?
A great investment strategy for beginner investors could be to start with a savings account and gradually invest in more complex financial products as they learn about them.
This is because the return on your money will likely remain lower than it would if you were an experienced investor, but it offers a lot of security that can’t always be found elsewhere.
Beginner investors might be looking to invest in something that is also more easily accessible, like index funds or ETFs (exchange-traded funds).
These products allow customers to buy into an investment portfolio without having to select specific individual stocks themselves – and it will typically have lower levels of risk than other strategies.
What Is A Great Investment Strategy For Intermediate Investors?
A great investment strategy for intermediate investors is to set up an automatic rebalancing system through a Robo advisor.
This ensures that they’ll be able to take advantage of economic ups and downs, while also ensuring their account doesn’t experience as much volatility.
What Are Some Great investment Strategies For Advanced Investors?
An advanced investor might find it worth the time to do more in-depth research into investments than others – this could include financial products with higher levels of risk or diversification strategies designed specifically around geographic location (i.e., investing only in stocks from certain countries).
The secret to success here is knowing when too risky becomes impractical, which can vary depending on where you are personally at financially.
It’s best not to let the fear of missing out on potential gains paralyze you.
What Are Some Great Investment Strategies For Expert Investors?
For the seasoned investor, it’s time to take a look at alternative investment strategies.
A popular one is trading in cryptocurrencies like Bitcoin and Ethereum.
These types of investments have been largely unregulated until recently: while we can’t give you any specific advice on how or when to trade your own coins, some people who’ve done well investing with cryptocurrencies are those who were able to afford significant losses if things went wrong–something many middle-class Americans might find difficult.
Investing is an art form that takes skill and practice; some investors may not be as open about their trades due to fear of potential financial disclosures which could put them at risk for insider trading charges.
In Conclusion
With the growing popularity of Bitcoin and Ethereum, there are more options for investing than ever before.
Some people invest in cryptocurrencies only while others might feel that this type of investment is too risky and choose to go with something else instead.
There’s no way to tell if cryptocurrency will be a good long-term investment or not so it really comes down to personal preference what kind of investments you want to make into your future.
Online trading can be beneficial because investors have access at any time they need it without having to worry about opening hours; however many times these trades occur outside traditional market hours which may create an imbalance between buy prices and sell prices when trying to find liquidity during certain periods.
Investing requires risk management skills as well as the courage to put your hard-earned money in a venture that might not work out.
One way of reducing risk is by investing as little as possible and diversifying.
For example, if you have $500 available for investment then it’s best to invest with different stocks or bonds instead of committing all the cash into one stock.
With that said, I hope you enjoyed my article about 7 types of investment strategies you can do online.
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