Smart Investment Strategies for Retail Investors for Superior Returns

3 min read

In this article, we will be discussing some of the smart investment strategies that one should follow in his/her investing journey for successful wealth creation.

Mr. Philip Fisher, a renowned Investor has shared some Investment Methods which we are going to discuss in this article.

Wrong Perception regarding Smart Investment Strategies:

i) Investment Should be Complicated: There is a general perception that Investment should be complicated that should not be understood simply.

ii) Fast Paced: It is another wrong perception among people where there is a feeling that one needs to be quick, or one needs to be the first person to understand everything and earn pretty returns, but that is not the case.

iii) Brutal: The above perception ‘Fast Paced’ can also turn out to be very brutal as there is neck-to-neck competition out there.

iv) Quick Profits: In the stock market, instant gratification doesn’t work or simply there are no quick profits available.

Correct Smart Investment Strategies:

Now after going through some of the wrong perceptions regarding smart investment strategies, we will be moving ahead towards some of the correct measures of the smart investment strategies.

i) Thought-Oriented Process: There should be a lot of thought and planning should be involved when you want to be a successful investor.

ii) Long-Term Process: One should keep in mind that he/she should not be involved in timing the market but should spare a handsome amount of time in the market.

iii) Not About Quick Profits: There are no quick profits available in Investment Journey, one needs to focus on those companies whose growth potential is very high over the longer horizon. There is no second thought that there will be some dull phase too, but one needs to believe in the long-term growth potential of the company. This growth potential of the company holds so much power that it can turn one’s initial investment into manifold times.

Common Characteristics:

In the Correct Smart Investment Strategies, we have highly focused on the long-term growth potential of the company, so now we will look into some of the common characteristics that a Growth Company possesses:

  • Company is product or service-oriented- Firstly, the Company should be products or services oriented.
  • High Earnings Visibility & Growth Potential: The Company should give high sales volume for the number of years, simply there should be great earning potential of the company along with a significant potential of growth in earnings.
  • Investment in Research & Development (R&D): It is very important to look at the factor that how the company is investing in the Research and Development of products. Mostly, the product is being ideated (initial idea), but after ideation, there are a lot of innovations required which cannot happen without investment in R&D. One should carefully look, how much % of the revenue is contributed towards R&D by the company.
  • Visionary Management: Company’s management should be strong and visionary.
  • Employee Relations: Company should also need to take special care of its various stakeholders like Employees, etc.

What Should You Do?

In this article, we discussed some of the wrong perceptions and some correct measures of Smart Investment Strategies, and hence one needs to strongly stick with the correct ones if he/she wants to be a successful investor over the longer horizon.

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