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Investing strategies

Smart investment strategies

There's no magic formula for managing your investments—but these few things come pretty close.
4 minute read

Points to know

  • When it comes to your investment strategy, building your portfolio the right way is half the battle. Focus on things you can control, like asset allocation and costs.
  • For most investors, once your portfolio is set, there are only a few things you need to do to stay on track.

Make sure you're doing these 3 things first

If you've already started investing but aren't sure you're doing it right, check out these tips for becoming a successful investor.

Start with your asset allocation

Of all the decisions you make, your asset allocation could have the biggest impact on the performance and volatility of your investments.

Start with your asset allocation

Help protect yourself through diversification

The more bonds and stocks you own, the smaller the impact each one individually can have on your overall portfolio, which lowers your risk.

Help protect yourself through diversification

Don't let high costs eat away your returns

The amount you pay to invest has a direct impact on your returns.

Don't let high costs eat away your returns

Performance

The measure of how much an investment has paid off, also known as return.

Stock

A security that represents part ownership, or equity, in a corporation. Each share of stock is a proportional stake in the corporation's assets and profits, some of which could be paid out as dividends.

Bond

A debt security (IOU) issued by a corporation, government, or government agency in exchange for the money the bondholder lends it. In most instances, the issuer agrees to pay back the loan by a specific date and make regular interest payments until that date.

Returns

The profit you get from investing money. Over time, this profit is based mainly on the amount of risk associated with the investment. So, for example, less-risky investments like certificates of deposit (CDs) or savings accounts generally earn a low rate of return, and higher-risk investments like stocks generally earn a higher rate of return.

Assets

Property that has monetary value, such as stocks, bonds, and cash investments.

 

Volatility

 The degree of fluctuation in the value of a security, mutual fund, or index, volatility is often expressed as a mathematical measure such as a standard deviation or beta. The greater a fund's volatility, the wider the fluctuations between its high and low prices.

Portfolio

All the securities held by a mutual fund or the total investment holdings of an individual or an institution.

Risk

The potential to lose money (principal and any earnings) or not to make money on an investment.

Then add these 4 additional steps

Keep performance in perspective

The length of time you have until you need the money from your investments is inversely proportional to the amount of time you should spend focusing on your performance.

Keep performance in perspective

Monitor your risk level & rebalance

Remember how important asset allocation is? It continues to play a critical role in keeping you on track.

Monitor your risk level & rebalance

Make regular investments

If you're trying to increase your portfolio to meet a specific goal, making small investments consistently makes a big difference.

Make regular investments

Tackle multiple financial goals in the right order

Most people have multiple demands on their money. We believe there's a right order in which to attack them.

Tackle multiple financial goals in the right order

GOOD TO KNOW

If you're in a higher tax bracket, taxes may be a big consideration when managing your portfolio. Find out what you can do to keep them under control.

Get information on tax planning

Saving for retirement or college?

See guidance that can help you make a plan, solidify your strategy, and choose your investments.

Start with your investing goals

Already know what you want?

From mutual funds and ETFs to stocks and bonds, find all the investments you're looking for, all in one place.

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Get more from Vanguard

Talk with one of our investment specialists

Call 855-850-6972

Monday through Friday
8 a.m. to 8 p.m., Eastern time

Ready to start?

Start investing now

Get more from Vanguard

Talk with one of our investment specialists

Call 800-962-5028

Monday through Friday
8 a.m. to 8 p.m., Eastern time

Ready to start?

Start investing now

All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.

Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited-purpose trust company.

There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.