An investment strategy is the plan you follow when investing your money. It determines what you invest in, how much risk you take and how long you intend to invest. A clear strategy helps you make consistent and well-considered decisions.
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A strategy prevents you from acting based on emotion or short-term news.
Within an investment strategy, you define your objective, for example capital growth or income from dividend. You also determine your investment horizon and how you allocate your capital across different types of investments. Some investors choose a long-term strategy with broad diversification, while others actively respond to shorter-term movements. The most important thing is that the strategy fits your financial situation and your risk tolerance.
Short example:
Suppose you decide to invest for 20 years for your retirement. You choose a strategy in which you invest €200 every month in a broadly diversified ETF and do not sell during temporary declines. You also agree with yourself not to react to daily news. By following this fixed approach, you stick to your plan regardless of short-term fluctuations.
Disclaimer: Investing involves risks. Our analysts are not financial advisors. Always consult a professional advisor when making financial decisions. The information and tips provided on this website are based on the personal insights and experience of our analysts and are intended for educational purposes only.