Personalizing Your Investment Strategy
You may want to invest directly in real estate, company stocks, precious metals, and so on; therefore, you should first increase your knowledge in various investment fields and, with the help of a financial advisor, grow your capital.
In today’s highly volatile world, investing without a strategy is like sailing through a storm without a compass. Research shows that investors who act with clear planning and strategy achieve, on average, three to five times higher returns than others. To reach our goals, we need proper planning; otherwise, they cannot truly be called goals. Knowing what is right is not enough—successful investing is not achieved merely by having an action plan, but by having a smart strategy that determines both what actions are necessary and what mistakes should be avoided. Warren Buffett has a famous quote in this regard: “Rule number one in investing: never lose your money. Rule number two: never forget rule number one.”
For this reason, defining an investment strategy and determining your level of risk tolerance play a crucial role in your financial success. Every investor, based on their self-awareness and goals, adopts a personalized strategy. Each type of investment carries different levels of risk and return. However, becoming aware of your own investment personality and improving your financial literacy can significantly reduce your investment risks.
By gaining knowledge about the diversity of global financial markets, you can move toward your goals with a broader and clearer perspective.
Choosing the Type of Investment
You may want to invest directly in real estate, company stocks, precious metals, and so on; therefore, you should first increase your knowledge in various investment fields and, with the help of a financial advisor, grow your capital. Alternatively, you can invest indirectly through different funds offered by brokerage firms. The first method requires enhancing your financial literacy, as well as dedicating significant time and attention. You must constantly monitor monthly profit and loss analyses and thoroughly examine potential risks and mistakes. In the second method, fund management is handled by investment companies or your financial advisors, and you can receive up-to-date news and information about your investments 24/7 through customer support.
Next, we will examine step by step the process of developing a proper investment strategy.
Step One: Knowing Yourself
With inflation and rapid changes in financial markets, selecting suitable investment options has become increasingly important. The first step in creating a financial strategy is to know yourself and assess your current situation. This assessment includes personal characteristics such as age, gender, marital status, number of children, and so on, as well as your financial situation, such as: risk tolerance, income level and stability, wealth and investment time horizon, employment status and business environment, future obligations and debts, investment knowledge and financial literacy, personal traits and preferences, and more.
By taking personality tests, psychological assessments, and consulting with advisors, you can better understand your mental capacity and potential for entering high-risk investment markets.
For example, highly volatile markets such as cryptocurrencies can cause significant stress for individuals with low risk tolerance.
For those who are highly stress-sensitive, safer markets such as gold, bonds, and index funds are more suitable for investment. In this way, with greater awareness, we can choose the path that leads to our goals—a process known in the investment world as IPS (Investment Policy Statement) writing. In IPS creation, advisors discuss with investors and, by understanding them, can quantify the level of risk, which makes market analysis much simpler.
To determine a financial strategy, you need to review the above factors and then start designing a personalized investment strategy. Many investment options suitable for one person may not be suitable for another, which is why wealth managers emphasize having a personalized plan.
Each individual should plan their investment path according to their own circumstances. For example, a single person with a high income may be willing to take more risk, while a retiree may prioritize a steady monthly income. At our Investment Holding, we scientifically design a tailored investment path for you based on your specific conditions.
