- Save
The most conservative strategy. The objective is to maintain the purchasing power of your savings, by keeping up with inflation. If you keep a large amount of money in a savings account at the bank, it is worth discussing what portion of that might be appropriate for this strategy. Note: there is no guarantee of principal with any of these strategies--your account’s value could fall below the amount invested. However, there is a high likelihood of losing real purchasing power the longer your money sits in savings and CD’s earning less than the inflation rate.
- Compound
This focuses on investments (stocks, bonds, LP ETF’s, REIT’s, and others) that pay out sustainably high interest/dividends regularly, which are then reinvested/cross-reinvested, so you can earn dividends on your dividends over time. Albert Einstein said, “Compound interest is the greatest mathematical discovery of all time.” Thanks, Albert, I couldn’t have said it better.
- Bargain-Hunt
Buy stuff when it’s “on sale”. Easy for everyone to do, for everything…except stocks. Also known as “value” investing. For me, this is the most fun strategy to manage. Over most of the last 100+ years, value stock investing, with reinvesting dividends, has outperformed all other strategies.
- Grow
This strategy has been the best performer in recent years, driven mostly by mega-sized tech/internet stocks like Apple, Microsoft, Amazon, Facebook, Google, and Nvidia. Did you know just these 6 companies make up over 30% of the S&P 500 index?! An important part of managing this strategy, for me, is shaving some profits from the “mega’s” to invest in smaller companies that I believe may grow faster, where one just might find “the next Amazon”.
- Speculate
Investments that might otherwise be in any of the previous strategies, but have a higher risk/ potentially higher reward factor. Micro-cap stocks, emerging markets, emerging industries, commodities, out-of-favor stocks, “alternatives”. Appropriate for those with “play” money, and those with a long time to save.