The stock market is surely your best bet if you are looking to earn exponential returns on your investments. But if you are starting out investing you need to be extremely careful with every step you take. Unlike the other investment avenues that you have tried so far the stock market is fraught with risks while the potential rewards are also high. One misstep can lead to huge losses and also discourage you from further investments. Let us take you through some of the investment strategies in the stock market that you should follow as a beginner -

Investing on Goals

What is your goal while investing in stocks? Don’t say you want to make money as everybody wants the same when investing in stocks. There are different investment strategies in the stock market based on your goals. Are you looking at it as a means to park your surplus wealth? Do you see it as a means to earn yourself an early retirement? Are you looking to invest in specific sectors that are likely to make headlines a decade from now?

You will have to figure out your goals first as this will allow you to choose the right stocks for your portfolio and grow your wealth exponentially. If your goal is to earn income from investment, then we advise that you invest in financial stocks. In this piece, a comparison between ARKF Dividend and XLF Dividend shows it is wise to invest in traditional financial stocks with records of healthy balance sheets.

Investing on Value

This is one of the most popular stocks investing strategies that are applied in the market. In a volatile market, there are some equities that are always undervalued as compared to the potential the company has in the future. The sector may be niche and something that will grow in the future or stock might have been badly beaten down due to a recent scandal or an incident that has happened somewhere else in the world.

You buy something that is undervalued and sell it when the equity has achieved its right valuation in the market. Investing in value requires an eye to spot the right opportunity. You may need to learn the basics of technical analysis before you make that value picks.

Investing on Time Frame

One of the most important investment strategies for beginners is to identify the right timeframe for your investments. If you have a long time frame then you have a cushion against volatility and thus invest in small capital stocks that offer higher potential returns albeit higher risk. The investment timeframe is narrow and you will need to use that capital to buy a house or fund your business you need to choose large-cap stocks that don’t have any foreseeable downside in the near term.

However, it is never wise to bet the capital for your near-term planned expenditure in the stock market as the return on investment is subject to several macro and micro factors.

To sum up, what we have mentioned above are the three basic things that you should have in your mind when you are making the first bets in the market. Apart from these, there are several investment strategies in the stock market that you need to keep in mind as a beginner.

Summary – In this write-up, we look at investment strategies in the stock market that one should keep in mind as a beginner.