As a worker, having financial freedom is a dream. You will not be bothered about your bills, your upcoming expense, and many more. With this mindset, many young workers are starting to plan their lives ahead. They start to manage their money and how to develop it. Some may think saving is a good choice, while those who want to get more profit choose stock investment to reach their goals. Investing in stock is a good choice for you if you want to develop your money in the long term. However, spending your money on investing is not always safe and profitable. Many people who do not know well about the process and strategies are facing a huge loss. You do not want this to happen. That is why you need to take a look at the following article.
Investing strategies you need to follow
Stock investing allows the funds you invest in to grow far beyond the inflation rate. Indeed, along with enormous profit opportunities, stock investment also has a significant risk of loss. However, with the right strategy, investing in stocks effectively doubles your income in the long run.
- Value investing
The third strategy you can consider if you want to invest in stocks is a value investing strategy. This is an investment strategy that focuses on buying value stock or value stocks. It was first introduced by investor guru Ben Graham in 1934. Stocks targeted are stocks whose prices are still undervalued and are believed to be high in price in the long run. That way, when one day is sold, profits are more likely to be pocketed by the investor. There are three stages of an investment strategy that you must go through:
- You have to find a stock that costs less than it should.
- The stocks chosen are those that represent companies with good financial performance (fundamental) and consistent track records.
- Make sure the shares come from companies that have credible management and implement good governance.
- Saving stocks
Saving stocks is routinely investing a certain amount of money in specific stocks over a long period. The hope is that the shares that have been purchased regularly will increase in price in the future to provide capital gains when they are sold. Saving stocks is actually adopting a dollar-cost averaging (DCA) investment strategy that can be applied to any investment. You buy the same stock bit by bit and repeatedly, without paying too much attention to the stock’s price movement, intending to own as many shares as possible.
- Growth Investing
The growth investing strategy focuses on finding stocks that have the potential for profit and high-income growth in the future. Unlike value investing, which emphasizes the importance of assessing the value or fair price of shares (valuation), growth investing does not really care about stock valuations. Most importantly, the stock is believed to have great growth potential.
- Income Investing
This stock investment strategy focuses on buying shares from companies that regularly provide profit sharing in the form of dividends. The income investing strategy is right for those of you who expect regular income from owning shares of a company. Investors who implement this strategy will tend to hold shares in the long term (buy and hold) because they are more focused on dividend income rather than chasing profits in the form of capital gains. Even so, there are also those who apply the buy and sell stance, namely buying shares of a company that wants to distribute dividends, then selling them when the dividends have been received and when the price is higher.
From those investment strategies, you need to research before purchasing stocks. You can start by reading the reviews and learn the market performance. As stock investment is highly volatile, keeping an eye on the market is essential to decide whether it is time to buy or sell your stocks on the market. Besides, keep up to date with the latest stock news can be very helpful too.
How to trade your stocks
Stock trading literally means stock trading where you trade shares in the short term. The goal is to profit from the difference in stock price movements in the short term, starting from 15 minutes daily to a maximum of a week. A trader is more focused on paying attention to market sentiment and conditions rather than the fundamental condition of the stock he wants to buy. The analysis used in buying shares refers to technical analysis. One of the famous investors who implement this stock trading strategy is George Soros. If you are interested in implementing a stock investment strategy by trading stocks, make sure you have mastered the technical analysis of stocks and have sufficient time to monitor market movements and stock prices. For example, suppose you want to invest in the energy sector like RECAF stock. In that case, you also need always to pay attention to the market performance as energy has relatively high volatility.
Investing in the energy sector like RECAF stock
The energy sector seems profitable as the product is needed everywhere. An example is an oil and gas company, Reconnaissance Energy Africa Ltd, or RECAF stock on the market. At the beginning of this month, RECAF stock loses its performance and fall up to 30 percent. It is proof that an energy company is not always profitable. But on the following days, RECAF can make it up and rise to 11 percent. This stock’s forecast analysis has an awesome performance for a long-term investment like one to five years. However, as this sector has high volatility, it is essential for you always to watch the market, including the economic and political situations. Once you are investing in the right stock, you will get a high amount of profit. While you make a wrong move, you can lose a considerable amount too. That is why investing in stock needs diversification to avoid this problem. Interesting, right? Start investing now and get your financial freedom earlier.