Why Is It Important to Have an Investment Strategy?

couple investing

Are you someone who wants to be prepared and take control of your financial future?

By planning ahead and having a financial plan in place, you may feel much more comfortable knowing your finances are on track to meeting your goals. 

According to research published by the Financial Planning Association of Australia (FPA),

  • 1 in 4 Australians have not mapped out a plan for their financial future at all.
  • 1 in 2 Australians say they often feel they could be in a better position when it comes to their finances.

If you are someone who feels anxious or unsure about how to navigate your finances, you may want to consider seeking financial advice. A financial planner can provide you with the right strategies tailored to your personal circumstance to improve your overall financial wellbeing. 

Within your financial plan, you may have an investment strategy in place tailored toward your long-term financial goals and to help put you in a better financial position. 

This article will share what an investment strategy is, the different types and why it’s important to have a strategy:


What Is an Investment Strategy?

An investment strategy is a plan that you follow when you’re making any investment decisions, with the focus on meeting your financial goals. This will be the basis for your investments, and it can help you ensure that you’re in the best position to meet your goals.

An important investment strategy to consider is diversification. Diversification can lower your portfolio’s risk and can help you gain steady returns. 

The performance of different asset classes can vary at different times. Therefore, by allocating your money across various asset classes, you can lower your portfolio’s risk, knowing that while one asset class isn’t performing well another might be providing you with high returns.

According to Moneysmart.gov.au

Having a variety of investments with different risks will balance out the overall risk of a portfolio. 


The Different Types of Investment Strategies

Investment strategies commonly focus on growth, income or a combination of the two.

There are several types of investment strategies you can consider, such as:

  • Growth Investing:
    When you’re using a growth investment strategy, you’re looking to invest in assets that you expect to generate significant growth either in the short term or long term.
  • Passive Strategies:
    Passive strategies encompass those investments that rely on long-term market changes. At Poole Advisory, we advocate the investment idea that success comes from time in the market rather than timing the market (ie. actively monitoring the stocks market and buying and selling shares at your estimated low and high points).
  • Active Strategies:
    Active investing involves ongoing buying and selling activity by the investor. It is where the investor will purchase investments and continuously monitor their activity to try and seek short-term profitable gains. 
  • Value Investing:
    When you’re using a value investing strategy, you’re investing in stocks that are trading at a much lower price than their intrinsic value. This is because you believe that the stock is undervalued and it will eventually move towards intrinsic value – and increase your investment returns.
  • Income Investing: When you’re using an income investing strategy, the focus is on investing in assets that generate a steady cash flow stream that you can use as a secondary income stream.


Why Are Investment Strategies Important?

The main reason for having an investment strategy is to ensure you meet your long-term financial goals and in return, support your ideal lifestyle. Your strategy will be the basis for how you invest, and it will help you to avoid making poor investment decisions.

Whether you’re looking to protect your assets in a stable market or generate a steady stream of income, an investment strategy can help get you there.

If you have a solid investment strategy in place, you should also be able to make better decisions on when to invest and what to invest in. This will help you avoid making rash decisions and prevent you from buying at the top of the market.

Investment strategies are especially important to consider for:

  • Retirees looking to generate a stable income stream, so they can enjoy their golden years
  • Pre-retirees looking to grow their retirement savings
  • Individuals looking to achieve an early retirement 
  • High-net-worth individuals with a large amount of wealth


Effective investment planning can also help you minimise your tax burden. By including tax planning strategies in your financial plan, you can ensure you are building your wealth effectively. 

Feel confident that you are creating the life you deserve through building your wealth with an investment strategy!


Seek Wealth Creation and Investment Advice from an Experienced Financial Adviser in Bowral or Sydney

At Poole Advisory, we offer a range of investment advisory services and wealth creation solutions to help you achieve financial freedom.

Whether you’re an experienced investor looking to grow your wealth or a novice who is interested in taking the first steps towards creating a successful investment portfolio, our experienced wealth advice team and investment advisors can support you.

Book a complimentary meeting to get started TODAY!


Compliance Disclaimer:

This information contains general advice only, that is, advice which does not take into account your needs, objectives, or financial situation. You need to consider the appropriateness of that general advice in light of your personal circumstances before acting on the advice. You should obtain and consider the Product Disclosure Statement for any product discussed before making a decision to acquire that product. You should obtain financial or credit advice that addresses your specific needs and situation before making investment or borrowing decisions. Taxation information is based on our interpretation of the relevant laws as at 1 July 2018. While every care has been taken in the preparation of this information, Prosperitas Partners Pty Ltd does not guarantee the accuracy or completeness of the information. The case studies are hypothetical, for illustration purposes only and are not based on actual returns

Poole Advisory Pty Ltd ABN 15 642 040 604 is a Corporate Authorised Representative (No. 001282603) of Prosperitas Partners Pty Ltd ABN 30 662 654 453 AFSL 544 917

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