Investment strategies require investors to look at the long-term and create a well-balanced portfolio. Besides that, it helps to restrict emotional decisions and stimulate rational investment decisions. This is exactly what investing is about: it is proven that emotional decisions lead to a reduced Return on Investment (ROI). In this article, we will look at good investment strategies and an often miscalculated phenomenon: time in the market beats timing the market.
Timing the market
Although lots of people believe they can, timing the market is hard. When looking at the fluctuations of the stock markets over time, you can see that there is an unmistakably evident growth trajectory. This also means that, with a long investment horizon, you are better off investing all your money at once and letting the market do the trick. This might feel counterintuitive, especially in times of markets with all-time highs. However, today’s all-time highs are simply another point on the chart in the long term. Try to set away your emotions.
Dollar-Cost Averaging (DCA) as suboptimal solutions
Afraid to put in your money at once? You can also decide to use a DCA approach. In this approach, you invest a part of your funds every week or month. Hereby you spread your exposure to market volatility and potentially have a lower purchasing price on average. However, as indicated, this is typically not the case when looking at the longer term.
Keep on compounding
Some investors claim it helps to buy and sell stocks frequently. However, with long-term horizons, you should think about the dividend you will receive as well. You can compound these dividends and let your portfolio grow. This is often the best approach, especially when you have a well-balanced and diversified portfolio. A good option to look at to ensure this is a set of Exchange Traded Funds (ETFs) that track indexes such as the S&P500 and MSCi World.
Leverage a stock market tracker
To keep track of all your investments you can use a stock market tracker. This is an application that allows you to have an overview of all your holdings, also across brokers. Through integration with brokers through Application Programmable Interfaces (APIs), you can have a holistic view. Next to that, it is updated in real-time allowing you to be on top of things. For example, when you receive dividends or conduct a transaction, this is automatically reflected. This is a huge advantage over the traditional use of spreadsheets and separate broker accounts.
Delta is a leading tracker application
To understand what a stock tracker can do, we will look at a leading example. Delta.app is an application that offers integration with brokers through API as well as cryptocurrency integration through wallets and a select range of exchanges. They offer an overview of your holdings and combine it with market news and stock analysis. This allows you to make better decisions. Next to that, it is possible to set up push notifications, which you can decide upon. Hereby you are interacting less with your portfolio, giving you more peace of mind.