Owning capital is not enough if you plan to enter the investment industry. Your aim is not only to spend the capital and hope for the best, you should be able to multiply your investment. There are several concepts that you need to understand in order to obtain maximum gain out of your investment. Tactical growth & income are parts of tactical investing, which is a common approach in investment world. Do you want to learn more about these concepts?
Diving into Tactical Growth & Income
Table of Contents
Understanding the general idea of tactical investing might be able to help you understanding tactical growth & income strategies even better. Fundamentally, tactical investing approach is more active than the strategic one. The main characteristic of this approach is actively responding to investment market’s condition. It focuses more on the present condition as well as foreseeable future. You need to be fully hands-on when employing tactical approach in order to maximize your gain.
When you are employing tactical income strategies, you aim to generate income while tackling the principal risk. Meanwhile, tactical income growth aims to produce growth that is long term. These strategies are employed because currently, financial market is getting even more complex. You need to work proactively to ensure capital security.
Here are three major components of tactical growth & income that you should understand.
Allocating assets carefully
In tactical investing, investor would have to adjust their asset allocations in their portfolio regularly. There are two modes of asset allocations that you can do, systematic and discretionary. In systematic allocation, investor is going to employ quantitative model which utilizes inefficiencies in the balance values systematically. Meanwhile, in discretionary asset allocation, you will only have to adjust the allocation according to current market value. By doing either of these methods, you will be able to decrease volatility of your investment. When you project that your investment is too unpredictable, you can always revert back to conservative asset allocations.
Utilizing Exchange Traded Fund (ETF)
Currently, ETF in on the rise so there is nothing that should stop you from utilizing the marketplace since it offers variety of advantages. You are trading on exchanges in a system that is not unlike stock trading. However, in conventional trading, trading is done once after closing. In ETF marketplace, you are going to see that the price will go up and down all day. You can conduct the purchase all day as price fluctuation occurs. You have to select ETF products with higher income potential and adjusted risk. Trading on exchanges is more transparent, less costly, and definitely more consistent. Thus, many people start converting to this trading segment. It is more secured and can be lucrative.
Hands-on risk management
Another key point that you have to employ in order to ensure successful tactical investment is very hands-on risk management. You should monitor your state or investment positions daily. If there is a trend that goes on in the market and you notice that it would be beneficial for you, then you need to adjust your portfolio. It also goes with asset allocation that is no longer profitable, you need to cut it off immediately. A principal in the risk management is preserving your capital for as long as possible. You do not want to waste your hard earned money for something that will not benefit you in the future.
As you can see the world of investment is not something that is easy to dive into. You need to be fully informed about what truly entails in the approach that you are using. Thus, you can fully maximize return of capital. Hopefully this passage answers the curiosity about tactical growth & income.