A portfolio is the collection of financial instruments such as shares, stocks, bonds, mutual funds, commodities, exchange-traded funds (ETFs), and even cash. It also includes the assets such as real estate, art, and private investments that can form part of the portfolio.

2.  Using the right portfolio strategy is the best pathway to financial freedom. This can
be considered a secondary source of income or as the additional savings, or to pay
off debt, the impact of a strategy is better on the financial future. Different types of
portfolio strategies may seem overwhelming initially, and there are different
segments such as stock and bonds where you can invest.
 The guide below will help you make the correct portfolio strategies. Moreover, if
you are a beginner, you can consider these pointers every time you invest in the
stock market. This will help you make a goal-driven portfolio strategy that fits your
situation and objectives. Keep reading to learn more.
What is a Portfolio?
 A portfolio is the collection of financial instruments such as shares, stocks, bonds,
mutual funds, commodities, exchange-traded funds (ETFs), and even cash.
 It also includes the assets such as real estate, art, and private investments that can
form part of the portfolio.

3.  A strategy is important as it is a kind of roadmap through which investors can use
their assets properly to achieve their financial goals. The market is unpredictable
as it is volatile. Moreover, the market is driven by human emotions, and any
unfavorable event can lead the markets to move drastically.
 In short, an investor should not be blown away by any the sudden upside or
downside, and should have a clear objective in mind is important. It is important
to preserve the capital, and it should be the investor’s primary goal. The profit
comes way more later for this. Having a good strategy is important, resulting in the
hedged risk.

4. Here are some of the common portfolio strategies used by investors and traders
around the world:-
Active Portfolio Strategy:-
 An investor with an active strategy aims to beat the benchmark returns. This is an
investment approach where the investors use the forecasting and assumption
techniques to help determine the securities to purchase and gain profit. An
investor who follows this technique needs to be active in the market and make the
trade frequently. The one who uses the active portfolio strategy aims for the long-
term moving capital consistently into profitable securities. Apart from this, the
investors try to identify the mispriced or undervalued stocks in the current markets.
This is the best strategy for the risk-takers in the share market.

5. Passive Portfolio Strategy:-
 The passive strategy is the total opposite of the active strategy, which is more of a
hands-off approach. This strategy aims to track the market-weighted index strategy,
also known as the passive strategy or the ‘index investing.’ The three behind this
investment is that the market is efficient. The investors who follow this approach
are the ones who believe that it is impossible to beat the market. This is a great
way to cut down the cost of handling the portfolio as the professionals change fees
for the management.
Aggressive Portfolio Strategy:-
 Another portfolio strategy is the aggressive portfolio strategy used by the risk-
takers. As the name implies, the investment technique maximizes the returns by
taking a relatively higher risk. This is when an investor approaches to invest in
expensive stocks and provide great returns. Capital growth is the primary objective
rather than preserving capital. The motive behind these investments is that ‘Big
rewards carry big risk.’ These are the stocks chosen from the companies that have
shown rapid growth and are expected to generate rapid earnings over the next few
years.

6. Defensive Portfolio Strategy:-
 The other type of portfolio strategy is the defensive portfolio strategy. It involves
the collection of stocks after carefully observing the trends such as market returns,
earnings growth, and dividend history. In this, the investors are conservative about
the investments and the type of strategy they are willing to manage their portfolio.
The ones on the less risky side regularly balance their portfolio to maintain the
intended asset allocation.
 The strategy focuses on protection first and then focusing on growth. The investors
who use this strategy look for stability and consistency.
Diversification is a Strategy:-
 This type of portfolio strategy is about adding a wide range of securities to the
portfolio. This is termed diversification by investing in different ranges. This is in the
wake of the attempt to limit exposure to the fluctuations in any single asset.
Usually, it is advised to have a mix of distinct investment segments that can help
achieve higher returns with lower risk.

7.  Moreover, diversification is the main component of the Modern Portfolio Theory
(MPT). According to the theory of different investors, this is the best way to achieve
better results by choosing the high risk and high return or low risk and low return
asset classes. The investor doesn’t have to go for the over-diversification, which is
when you have over 20 stocks in the portfolio. On the other hand, under
diversification shouldn’t be practiced too that the mix has less than 3 stocks. The
ideal diversification should follow the 8-20 stocks.
Non-Correlating Assets as a Strategy:-
 The risk in the market is divided into two ways. The first one is the systematic risk,
and the other is the unsystematic risk. The systematic risk can only be present and
cannot be controlled by either the company or investors. On the other hand, the
Unsystematic risk can be reduced by taking specific actions. Having a non-
correlating asset is a breakthrough. In simpler words, the assets behave according
to the market changes. Usually, they move in the opposite direction, showing an
inverse effect. This will help cut down and balance the volatility in the overall
portfolio.

8.  For example, the recent dispute between the Russia-Ukraine war and its effects on
two non-correlating assets, Gold and Stocks. This news has resulted in the biggest
crash in the Indian stock markets in the last few years.
 The benchmark indices (Sensex and nifty) went down 4.72% & 4.78%, respectively.
On the other hand, commodities like gold increased by ₹2,250 to ₹52,630 per 10
gram while silver jumped 5% to ₹67,926.
Stop Loss order as a Strategy:-
 The stock prices are volatile and will move up and down depending on the market
supply and the demand. The discovery happens when the bid price (by the buyer)
and ask price (by the seller) meet at an equilibrium. Thus the prices move
accordingly every millisecond.
 As an investor, a single rupee change can bring significant change, which is loss or
gain. In short, the investor must be more cautious toward such movement and
make sure to get the best returns possible. One such way to be saved is by putting
the stop loss. This way, an investor can exit an investment if the price moves to a
certain level. The order is automatically executed when they reach the goal price
set by the investors.

9. Dividends as a Strategy:-
 One of the best parts of the stock market is generating two-way returns. The first is
a capital appraisal, and the second is through stock dividends. When a company is
in profit or a surplus, it gives out a portion of it to the shareholders in the name of
the dividends.
 Also, it is stated that if you invest in the companies that pay dividends is a proven
method for delivering above-average returns. You can analyze and come out to find
the best dividend-paying stocks.
 For example, the dividend payment implies how much a company pays out in
dividends each year. You can also consider the Dividend payout ratio, which shows
what portion of the net income is being paid out as dividends. This strategy is
adopted by the one who looks to generate another source of income.

10. Different types of investment strategies
Here are the different investment strategies that one can invest in and plan
accordingly for the same.
How To Choose Your Investment Strategy:-
 First and foremost, take a complete insight into your financial health. You have to
take accountability for the money you spend and save, what is the=income you
generate is, and any existing investments you may not realize you have.
 Distribute the capital so that every segment is covered, and then you are left with
the money to invest. The money left can be used for the investment, building your
portfolio, and planning your expenses.

11. 6 Types Of Investment Strategies
 Here are the 6 types of investment strategies. These are divided based on the size
of the investment and approach for the same. The best investment strategy is
which drives the highest profits. There are different factors you need to consider
before investing. The best investment strategy goes beyond searching for the one
that yields the highest profits. There are so many factors that you need to consider.
As preferred, one should look for the risk tolerance, the level of preferred activity,
and the turnaround time. Here are different types of investment strategies.
1) Short Term Investment Strategies
2) Long Term Investment Strategies
3) Active Investment Strategies
4) Passive Investment Strategies
5) Low-Risk Investment Strategies
6) High-Risk Investment Strategies

12. 1. Short-Term Investment Strategies
 A short-term investment strategy is the one that provides the result in around 3
years. For example, there are wholesaling, high-interest savings accounts, short-term
bonds, and cash management accounts. Usually, the investors drive towards the
short-term investment as the returns are directed towards the faster returns. The
factor to be considered in the short-term investment is the profitability as the
turnaround is just for 3 years. Also, many investments don’t have much time to
generate results, even if they are taken for the long term.
2. Long-Term Investment Strategies
 A long-term investment is usually what comes to mind when investing in the stock
market. These include investing in rental real estate, stocks, mutual funds, and gold
or collectibles. The returns that are to be generated take over several years, as long
as an investor chooses to stay involved in the market.
 The strategies for long-term investment can be a great deal as this involves lower risk
and higher returns compared to other investments. As stated, the capital will be
locked up for an extended period, so the money is blocked for a longer period.

13. 3. Active Investment Strategies
 This is an investment that is done daily, and this is where the investor is regularly
involved with the market. An example of active investment is stock portfolios,
where the investor is engaged personally without the involvement of the
financial institution or advisor.
 This is great for those who want to grow their portfolio by themselves with the
finances, whether it be the portfolio management or the assets.
4. Passive Investment Strategies
 It is when the investors allow someone to intervene and manage their portfolio.
It is like investors sit back while their assets make profits for them. This option
includes the REITs index funds. Passive investment still requires much of the
research. Even if there is no day-to-day involvement, one needs to intervene
now or then. This is usually eyed as a way to supplement their regular income or
save for retirement.

14. 5. Low-Risk Investment Strategies
 Talking about the low-risk investment strategies, it is an investment for all age
groups. An investor will see some of the returns without touching the initial
investment or risking a large capital. This includes purchasing bonds, CDs, and
savings accounts.
 Diversification is one big factor in low-risk investing —this is when you spread
your capital into several investment types. The diversification of the portfolio
safeguards against losing all of your funds if one investment does not perform
well.
6. High-Risk Investment Strategies
 Risk is a kind of a different word that is involved in various investment strategies
and is referred to as the volatility of a given investment. Usually, people
associate high risk with returns and profits, but this is not the case for everyone.
The loss covering is easier for the young investors as they have time to invest and
earn. Examples of high-risk investment strategies include investing in startup
companies or “playing” the stock market.

15. Conclusion – Types of Portfolio Strategies
 In conclusion, this article has covered the various types of portfolio strategies
used by investors in their portfolios. While investing in the fluctuated market, it
is important to set a goal and work accordingly. Also, following the goal, the
strategies should be made and implemented. Moreover, if you want to know
about the best portfolio management service provider, you can read the article
“Best PMS in India.”

16. Read more about any information to visit www.kundkundtc.com
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