Posted in Finance, Accounting and Economics Terms, Total Reads: 231
Definition: Investment Strategy
Investment strategy is plan employed by individual or an organisation of investment based on long term financial goals. Most investment strategy is based on risk-return dilemma. So if an individual or organisation wants to maximise their returns on investment they should have high risk appetite and vice versa.
Thus risk free investment strategy generally has very low returns in short term. Investment strategy is generally employed by allocating assets and by considering risks in mind. Investors who do not have any strategy are generally never able to reach their financial goals.
There are various investment strategies based on investing in stock market or investing in foreign market. Also there are other strategies like value investing where firms are valued based on their future market potential and investors will maximise their returns based on performance of valued firm. So one strategy may be successful for some firm and same strategy can be unsuccessful for some other firm. Thus firms should employ particular strategy based on their future financial goals.