3 Main Strategies for Stock Investment
There are various strategies used by investors to invest in shares. Starting from the most scientific, to the supernatural Investructor. This strategy is carried out to achieve the desired target or when things happen like asymmetric investing. But when viewed based on Fundamental Analysis, there are three main categories of strategies for investing in stocks that can be chosen, namely Income Investing, Growth Investing, and the last is Value Investing. An explanation of each strategy can be read further.
Income investing
Income investing is an investment strategy that focuses on finding “income stock”, which is shares of companies that routinely distribute profit-sharing in the form of dividends. This strategy is a strategy that aims to get regular income from shares while trying to minimize the risk of stock investment.
Growth investing
Growth Investing is an investment strategy that focuses on finding “growth stock”, which is a stock that is believed to have high-profit potential and high-income growth in the future. This strategy focuses on buying stocks that have the potential to grow so that sometimes they don’t care too much about valuations. Even high-priced stocks can be bought if they still signal future income growth. This strategy is believed to have a small risk because stock issuers have made profits and have grown. Analogous to football, this strategy is like looking for young players who don’t have much experience of competition, but show signs of potentially becoming a star player.
Value investing
While Value Investing is an investment strategy that focuses on finding “value stock”. The basis of this strategy is stock valuation. Investors only buy a stock if the stock is far below the fair price (undervalued) or is considered cheap. If likened to football, this strategy is like a talent scout who is looking to remote areas to find new players who are not yet skilled, can be paid cheaply, but have extraordinary natural talent. It is hoped that natural talent can become a star. This strategy seems to have a small risk because it looks for shares whose valuations are cheap, so it buys at lower prices. But in general, blue-chip valuation is not cheap because it has been hunted by many investors, leaving only less attractive stocks like second or third-tier shares. This increases the risk because the second or third-tier stocks are sometimes difficult to predict their future performance.