I started investing in US and foreign stocks a month back via GoTrade. If you want to start buying foreign stocks, too, you can use my invitation code, 458377 so you can use this app, too. Anyway, I’ve noticed that I’m the kind of investor who was doing Momentum Investing at first. This is the reason that I got to buy AMC stocks, much like my favorite YouTube vloggers.
But as soon as I saw and researched that the best way to go if you are more on the conservative side, is just do Dollar Cost Averaging.
What is Dollar Cost Averaging?
Dollar-cost averaging or Peso-cost averaging (since most of my readers are from the Philippines) is when you amke the same amount of investments at set regular intervals. Example, if you make a $10 investment on Vanguard Total Stock Market ETF every 30th of the month on Go Trade, that is cost averaging.
Why do people like this way of investing? I personally think that no matter how you try to predict the market, you can’t be 100% right. So the regular investments that you make at regular intervals just captures the market prices at all levels whether it rises or dips and thus, you mitigate the risk by “averaging” the prices out.
I personally find this investing strategy comforting. I used to check the markets daily (maybe I still do… haha!). But, now, I am more at peace and comfortable.
Also, there are other types of investing and some methods may work well for other people.
The other one is Momentum Investing, just like how I did it when I was starting.
Momentum buy stocks when they know that the prices are going to go up and sell stocks when the prices drop. I was fascinated at first by checking charts and studying trends, but then, personally I got tired of monitoring. But there are people who are really good at this. Stock traders and brokers are very experienced when it comes to this and they probably enjoy this as much as I enjoy watching shows on Netflix or playing games online. You can try this type of investing, too, but just know that there are risks involved.
The other type is value investing. I was watching a video yesterday of this vlogger going through some undervalued stocks that people don’t notice. That vlogger is a value investor and always looks out for these types of stocks. In the article that GoTrade shared with us, they mention that these “undervalued stocks are stocks with prices they believe are below the intrinsic value of the security”.
So when you buy stocks that are undervalued now and then they grow in value, your investments grow. In this kind of investment, you just need to know and look at different kinds of stocks and search for the ones that are undervalued.
And another type is Growth Investing. Just like the Venture Capitalists who are looking for the next big “unicorn”, growth investors are looking for the next big stock. These investors look at the trends and look at the growth potential of the company. Usually, since these are newly listed companies in the stock market, they don’t give out dividends.
And the last type that I know of is called Dividend Investing. Aside from Dollar Cost Averaging, I actually am also trying this out. I look for stocks that give a high divided yield, and then I DCA on those stocks. Usually, those that give out dividends are more established brands. But note that the frequency of dividend payouts are not guaranteed. If a company decides not to pay dividends for the year or quarter, it’s their choice.
So these are the types of investment strategies that I know of. Did I miss anything? How about you? What type of an investor are you?