Top 5 Factors That Could Affect Your Investment Strategy
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Top 5 Factors That Could Affect Your Investment Strategy

Investment is a crucial component of financial planning. You invest to multiply your money. However, monitoring your investments may be rather daunting when you see the appreciation is lower than expected. It may send anxiety waves to see the short-term fluctuations in your investment, for instance, the one we witnessed during the pandemic.

Hence,it isprudent to adopt the investment strategy that is best suited for your needs. Here is best a list of Top 5 Factors That Could Affect Your Investment Srategy 

1.      Life stage

The numero uno factor affecting investment strategy is the investor’s life stage. An investor in his 20s or early 30s may prefer to go aggressive with his investment. Equities will form a significant part of his investment strategy. On the contrary, an investor in the 50s will choose to go safe with his investments and opt for debt-linked instruments in his portfolio.

 2. Investment objective

When you begin with the destination in mind, half the task is done. You will have a clear objective that you need to work towards: buying a house, funding higher education, or planning for retirement. Have your budget aligned with the objective. A budget helps to strategise the allocation of funds for investment and savings. The ideal practice is to have a savings budget instead of an expenditure budget. This process is empowering, as it facilitates limiting expenses, prioritising savings, and letting you be in total control of your money

3. Portfolio diversification

The oft-repeated advice in investing, ‘Do not put all your eggs in one basket,’ has become the golden rule. The need for portfolio diversification will make you decide the proportion of investments in each bucket—equity, debt and hybrid.

4. Investment outlook

Most prudent investors strongly recommend having an investment budget and spending whatever is surplus. When you have an income elevation, do not increase expenditure but scale up investments. Step-up SIPs are a good option for investments. They offer the flexibility to channel your increased earnings into additional contributions in SIPs without having to initiate a new SIP. The incremental income should be converted into SIP. Having such an outlook will make your investment strategy an aggressive one, where you prioritise investments. 

5. Market volatility

Market volatility adds to the anxiety of a first-time investor. Short-term upheavals in the markets make him doubt his investment choices. However, these do not bother the patient investor, as he knows that growing your investments implies ‘time in the market is more important than timing the market’. The first category of the investor will have his investment strategy modified to minimise the effects of fluctuations and hence include debt-related instruments in his portfolio. On the other hand, the seasoned investor knows this shaking up is not here to stay, and the long-term is always promising—therefore, going in for a more aggressive strategy.

To conclude, it is best to have an investment strategy in line with your objective and allocate assets accordingly. Key in these factors before selecting the asset classes, and make them part of your portfolio through online investing. A strategy backed by brilliant research and with excellent online investing tools is worth putting your money in. The best investment strategy will provide you liquidity along with good returns to build a substantial corpus.