Sound Investment Strategies

SOUND INVESTMENT STRATEGIES
By www.ProfitableInvestingTips.com

http://profitableinvestingtips.com/investing-tips/sound-investment-strategies
The point of investing is to make
money or at least stay ahead of
inflation.

What are the best ways to make
money through investments?

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Before We Continue…

All of us work a day folks would like to
retire with enough money to travel,
pursue our dreams, or just live our
golden years in comfort.

Many investors seek to move out of
their daily routine into a world of
finance and financial gain.

Knowing how to make money through
investments offers the promise of a
richer and happier life.

So, how do we approach the issue of
how to make money through
investments?

If we just came into some money
maybe the question is how to invest
10 000 dollars.

For those with a sharp eye for real
estate, it might be well to ask, what
are profitable real estate investing
products?

The most reliable way to make money
through investments is to develop and
use sound investment strategies as
opposed to seeking a get rich quick
scheme.

The basics that underlie sound
investment strategies are fundamental
analysis of investments, calculation of
intrinsic value of investments and
diversification of risk.

Fundamentals

The investment guru, Warren Buffett,
only invests in a company when he
fully understands what it does to
make money and how it will continue
to make money in the future.

This is fundamental analysis. Hand
in hand with an understanding of just
what a company does and how this
leads to profits is calculation of
intrinsic value.

This is the expected cash flow of a
stock discounted to current dollars.

When intrinsic value is higher than the
current stock value it is time to buy
the stock.

This approach has made Warren
Buffett one of the richest men in the
world, currently ranking number three.

One Investment or Many?

It is certainly possible to make millions
of dollars investing in just one stock.

If you had purchased a thousand
dollars of Microsoft the day it went
public in 1986 and sold as it peaked in
1999 you would have seen your
$1,000 initial investment rise 3,000
fold to around $3,000,000.

But the problem is finding the
investment that will hit the home run.

Thus many investors diversify their
portfolio to include stocks, real estate
(first of all their home), bonds and
cash.

How do you diversify your
investment portfolio?

Diversification is a means of reducing
risk and increasing opportunity in
investing.

The chances of having a stock in your
portfolio rise significantly in price goes
up when you have five well-chosen
stocks instead of one.

The chances of losing all of your
investment capital also go down when
you diversify your investment portfolio
among several stocks in several
market sectors.

Likewise, if a part of your investments
is in property, a part is in stocks, a
part is in bonds, and a part is in
offshore investments you can reduce
risk and increase the opportunity for
profits.

There is always a bull market
somewhere.

Diversification is one of the sound
investment strategies that help you
plug into profits where they might
have been expected.

The investment book, A Random Walk
Down Wall Street, supports the
concept of diversification by noting
that a well-diversified portfolio is more
likely to prosper than one that
includes only a couple of stocks.

Sound Investment Strategies

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