Do you have some money and want to invest it somewhere? What options do you have? Generally, there are four different investments groups from which you can generate returns. These are equities, property, cash, and fixed income. They are mainly termed as the asset classes. Their performance is recorded to be varying significantly with time. The main reason is that the investments with a high level of risks are in a position of performing better for a long period of time as compared to the type of investments that are accompanied with the low level of risks.
The chosen investment strategy is required to fit an individual’s personality, the available time and the risk tolerance of this individual. The main investment strategies in Australia are value investing, income investing, growth investing, qualitative measures, and growth taking place at reasonable price. These are discussed as follows;-
Having knowledge about the intrinsic value of the available stock is the main requirement in this case. Buying of the quality business at a reasonable price forms the key objective for value investing. Here as an investor, you are required to purchase a given stock at a price below its intrinsic value or close to it.
This is a case where a number of investors use the qualitative measures to come up with their own investment strategies. However, these strategies are in a position of being combined with others and their performance is said to be effective. For doing research on a particular company there are a number of qualitative questions you need to ask yourself about the management, corporate governance, company, and industry and competition
This investment strategy focuses mainly on the prospects of the future growth rather than the current value of price. In this case, the growth investors are capable of buying the companies carrying out their trade at a high PE ratio. Here they have a belief that the associated worth will grow with time.
Growth at a Reasonable Price
This investment strategy combines value investing and growth investing. The investors for this case are after the companies that their ROE are high and increasing, have positive earnings for the future, a strong potential of sustainable growth, a share price that is below the intrinsic value, and finally, low price and PE.
This an open investment strategy that focuses on income with an objective of picking companies that are in a position of providing a steady type of income stream. Other factors to keep in mind are the levels of dividends yield (does it always remain high?), the prospects of growth and growth earnings, and other qualitative measures.