Diverse kinds of stock investing | Finance management tips

Diverse kinds of stock investing

Article by Michael Miller

Aggressive investment in the stocks means investors are taking immense risk in the market. This risk can be in various forms. You make investment in highly unpredictable markets when market fluctuations are beyond any mechanism of fundamental or analytical research. The fall or rise in the stock prices occurs quite opposite to the expectations of investors. Some very daring and experienced investors make money even in these situations.

There is another form of marketing which is aggressive, where you purchase stocks which appear as ?gone cases? as per market calculations. But in-spite of all wise counsel, these stocks exhibit high growth and provide handsome dividends. These stocks could also slip down the index as they are already dubbed as spent cases.

Conversely, if you make investment in some highly reputed stocks like Microsoft or Wal-Mart, being aware that they are expensive with no scope of any price increase in immediate future. The buyers of such stocks invest in them to gain access to regular income these companies provide in the form of dividends. The rich dividends paid by these blue chip companies almost negate their high prices of shares which people spend to purchase them.

As the saying goes? the people who take a deeper dive in ocean may walk out with expensive gems or may never come out at all?. Investing aggressively is just not for everyone. Defensive approach

As a defensive approach, many people recommend that the good option for investment is treasury bonds of Government. They reason that as we are purchasing the debt obligation of Government, we will surely be compensated for the amount promised.

A simple investor, more so for a newcomer in this field, should adopt a defensive attitude and should remain very careful while investing in stocks. As cautious and slow approach may not be able to provide him with any remarkable returns in the beginning, but as he learns the tricks of the trade, his returns could appreciate with time. This approach surely testifies to a famous proverb?that slow and steady wins the race?.

As a defensive investor in stocks you should formulate a firm strategy and place a set amount of money each month for investment in the stocks. You can indulge in a research or ask your stock broker as to which stocks would be best for the investment. If you can somehow manage within your current income sources, best options for you would be to go for dividend reinvestment plans.

You must also remember as an investor that high dividend stock shields you when markets are down. This is so because as prices of stocks fall, there is an increase in dividend yield because cash dividend can be larger than the purchase price of shares by a huge percentage. Often the dividend paid by some companies is very high and it attracts large numbers of investors which results in high prices of its stocks even during the slump in the stock markets.

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