What ETF Investment Strategies Should You Follow?
Before private investors create their ETF portfolio, they should consider how they want to invest. One of the most important questions investors should ask themselves is: what is my investment horizon? In the Buy and hold strategy invest money once in an ETF portfolio and then only make adjustments to the original weighting of the portfolio. The profits made are reinvested as part of this ETF investment strategy so that you as an investor can benefit from the compound interest effect. Phases in which the value of your investment develops negatively are endured, since prices will usually rise over the long term. Incidentally, this ETF investment strategy is also suitable for an ETF savings plan.
The investment period usually has a direct impact on the risk that can be taken when investing. If you as an investor want to be invested in the stock market for many years, you can take higher risks at the beginning of your investment. In this way, you can increase your chances of making returns and if the strategy doesn’t work, you can restructure your portfolio. If you are about to retire or generally only want to take small risks, you need to be more careful when building your ETF portfolio.
Also the dividend strategy is very popular with private investors. ETFs are primarily selected here, which contain the shares of companies that pay out high dividends. You can use this strategy to generate passive income. In addition, some stock market experts assume that companies that pay high dividends are doing well and making high profits.
If you have a growth strategy track, focus your investment on a specific industry. The aim here is to identify growth markets at an early stage and to participate in the success of companies in this sector. When assembling your ETF portfolio, you can take advantage of the fact that the stocks of some companies appear in many different ETFs and combine several of these ETFs in a targeted manner to form a focal point in the portfolio.
In the size strategy is an ETF investment strategy in which you focus on the market capitalization of the companies in whose shares you invest. This does not automatically mean that you only invest in large cap companies, but that you cleverly combine companies with different stock market values.