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There are a lot of investors who are happy to get a regular and predictable income from their investments. Then, some investors like to see their investment portfolios grow over time. There are various ways of growing a stock portfolio, but they all rely on effective strategies. Some of these strategies require time, while others require investors to take calculated risks. Here are some strategies investors use to grow their stock portfolios.
Buy and Hold Strategies
This strategy entails buying and holding stocks for a long time. The right stocks appreciate and outperform most other investment options, so this is an excellent choice for long-term investors. The key to succeeding with buy and hold strategies is investing in growth stocks whose value increases over time. If you choose the right stocks, your portfolio can keep growing with little to no monitoring. This strategy is suited for those who are not concerned about short-term growth, price movements, technical indicators, or the volatility of the economy as a whole.
Investing In the Right Sectors and Types of Companies
Investors who are interested in aggressive growth typically invest in sectors that grow very fast. Some of these sectors include healthcare, technology, small-cap stocks, and construction. Although these sectors have higher-than-average returns, investors have to contend with higher volatility and greater risk.
Investors who are interested in a balance between growth, risk, and volatility typically invest in blue chip stocks. These are stocks of well-established, financial-sound companies that have been around for a long time.
These companies’ stocks are very stable, have reliable growth, and result in acceptable levels of risk for different types of investors. Investors can look through this list that contains a comprehensive collection of blue chip stocks to find those that suit their investment personalities.
No matter which route you choose, you will get the best results by holding stocks longer and making careful investment decisions regarding what to buy and when to buy and sell.
Regardless of the type of investor you are, you should always diversify your stock holdings. Diversification works well when paired with buy-and-hold strategies and allows you to reduce or eliminate the risk associated with volatility and inflation.
Diversification is simply the practice of investing in more than one type of asset. When diversifying your stock investment, you might want to include options like normal shares, dividend shares, exchange-traded funds, and mutual funds in your portfolio.
Each of these types of stocks and investments has pros and cons, but they amplify the pros and dilute the downside when used together. This happens because one asset class might be doing poorly while another is doing well thus providing the balance and security you are looking for in your investment portfolio.
Because of how small they seem, many people do not think too much about commissions when investing in stocks. Many brokerage firms charge a percentage of your investment or trade for every trade you make.
This amount can add up if you do many trades all the time. The money that goes to the brokerage firm is money that is not going into your investment portfolio. Due to accumulation, you lose a lot of money you would have otherwise made if you had done fewer trades.
Talk to the brokerage firm to know how much you will be paying for things like trades or mutual fund exchange expenses. Cutting out these expenses early will save you a lot of money in the long term — money that will go into growing your portfolio.
These are just some of the strategies you can use to ensure your investment portfolio grows. If you want more information, you can always talk to a brokerage firm to discover other ways to do so. Do not forget to do your due diligence to protect yourself from high commissions and other costs as they can drag your portfolio backward.