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Business Investment Strategy

Updated:2017-10-9 10:12:10    Source:www.tannet-group.comViews:77

Business investment strategy, in finance, is a set of rules, behaviors or procedures, designed to guide an investor's selection of an investment portfolio. Individuals have different profit objectives, and their individual skills make different tactics and strategies appropriate.Some choices involve a trade-off between risk and return. Most investors fall somewhere in between, accepting some risk for the expectation of higher returns.

Business investment strategy is the plan for deciding how and what to invest in to meet your long-term goals. It's a natural extension of the original company vision you outlined when you wrote your first business plan. The first thing you need to do is ask yourself where you want to be five years out and what you're doing to make that successful. And then you can reverse engineer from there.

Knowing your long-term goals will help you decide where to invest your funds. For example, if you're hoping to create a recognizable brand, your investment strategy will be heavily focused on ramping up your marketing department.

Active vs Passive
Passive strategies like buy and hold and passive indexing are often used to minimize transaction costs. Investors don't believe it is possible to time the market. Active strategies such as momentum trading are an attempt to outperform benchmark indexes. Investors believe they have the better than average skills.

Buy and Hold
This strategy involves buying company shares or funds and hold them for a long period. It is a long term investment strategy, based on the concept that in the long run equity markets give a good rate of return despite periods of volatility or decline. This viewpoint also holds that market timing, that one can enter the market on the lows and sell on the highs, does not work or does not work for small investors, so it is better to simply buy and hold.

Value vs Growth
Value investing strategy looks at the intrinsic value of a company and value investors seek stocks of companies that they believed are undervalued. Growth investment strategy looks at the growth potential of a company and when a company that has expected earning growth that is higher than companies in the same industry or the market as a whole, it will attract the growth investors who are seeking to maximize their capital gain.

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