Main investment strategies-min

Main investment strategies

We are currently at a good inflection point on whether to invest or not to invest. The stock markets are in doubt, and with the advances of Pfizer and Moderna vaccines, everything points to the rise of these, so in this brief post we will explain the three most important investment strategies, depending on our profile.

  • Investment in companies that pay dividends

This is a fairly conservative investment strategy (with little risk). It consists of investing in blue chip companies, companies that generate full confidence, and that you know with certainty that they will always distribute dividends.

To find out if they distribute dividends year after year, you just have to go to the company’s website (or other specialized websites for this purpose, such as Yahoo Finance), and see the dividends it pays out year after year to its shareholders.

With this investment strategy, we will be able to generate a bonus with the dividends generated by the companies in our portfolio.

Another possibility to invest in companies that always, absolutely always distribute dividends, is to inform ourselves about the Dividend Aristocrats companies. These are companies that have been not only distributing dividends for more than 25 years, but also constantly increasing them.

These companies generate a double advantage for us. On the one hand, as we have said, they distribute constant dividends, so that the main objective of our investment is covered. On the other hand, if we also invest in a company that generates dividends and has a future yield, we can also see how the value of its shares increases, thus generating higher returns.

  • Bloglehead Portfolio

It consists of investing in index funds, that is, replicating indexes of various types, in order to be completely diversified.

A conservative profile may opt for 70% bond index funds and 30% equity index funds. An aggressive profile could even opt for 100% equity index funds.

The important thing is to establish an amount of equities and an amount of fixed income, establishing a powerful diversification, and this would be enough, since index funds are already diversified enough to invest in more assets.

  • Permanent portfolio

The permanent portfolio seeks to obtain returns in any market asset, opting for 25% of variable income (to be able to generate good returns), 25% of fixed income (to obtain lower returns, but assured), 25% of gold (to establish defensive securities in case the market falls) and 25% of liquidity (to be able to have availability of our capital).

With this investment strategy, we will be winning almost always, and we will be reducing volatility.

It is true that with this strategy we will not gain a spectacular amount, because in this diversification, there will always be some variable that devalues, but in general, we will be giving positive.

The ideal would be to build this portfolio with ETFs and index funds for equities, because of the diversification obtained explained in the previous section.

And that is the end of it. These are not the only investment strategies, but they are the most important and the ones that have given the best results over time. And you, which strategy do you prefer?


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