How To Develop An Investment Strategy

  • Oct 24, 2018 AEDT
  • Team Kalkine
How To Develop An Investment Strategy

An investment strategy or sometimes referred to as investment plan is one in which it is important to identify your priorities and is usually developed in few steps which includes the following:

  • Your investment objective
  • Time Horizon
  • Asset Allocation
  • Types of investments
  • Risk Management plan
  • Accessing information


It is vital to have a clear investment objective based on your risk tolerance and should consider factors like capital growth and the level of income you are expecting to achieve. The purpose of the investment should also be kept in mind while developing an investment plan.

While choosing an investment it should be crucial to understand the time frame, if you have a long-term goal and can hold on to stocks, you may come through the market downturn and can consider higher risk and higher return profiles. While on the other hand if your investment time frame is short you may need to be more cautious.

Against the risk of underperformance in any one specific asset class, diversifying across asset classes may protect an investor from this. You may be aggressive or conservative and choose accordingly.

The choices that you are happy to make and those that you don’t want to make should determine the types of investments you make. For example, if you will stick to a speculative mining stock Magnis Resources Limited (ASX: MNS) or stick to a dividend paying well established company like National Australia Bank (ASX: NAB). Over the period one can always come back and revise the investment objectives known as rebalancing your portfolio where you can adjust accordingly with your skill level and risk appetite.

Identifying the risk to your investment strategy is equally important as identifying the shares are and how you will mitigate those risks. One of the most important steps is risk management when establishing your investment strategy.

In today’s age there is plenty of information, research and tools available that can help us to make the right investment decisions. In case one is not confident about the decisions made for investments, he or she can always seek professional assistance.

Investment strategy continued:

Other than these steps one can also focus on savings in a safer option. If for example someone is saving 5% in the real estate investment strategy, then they can increase the saving amount year on year and take a more disciplined approach for their investments.

Also, what many people overlook is the investment costs which can actually reduce the investment portfolio to some extent, so one should look for the lowest cost products that meet your strategy. While keeping this consideration you should invest consistently, even in the falling markets or at a time when the market eventually recovers. Remember, it is a strategic i.e. long-term game and one should not be influenced by the short-term fluctuations in the market.

You should also have a general sense of the industry sectors of your interest and understanding and investment themes that you may be interested in. For example, if you have an experience in health care you could leverage it by investing in impact investments in the same sector.

Forming a macro view is a broader approach to investment strategy where one can look at the level of US interest rates, the oil prices, the growth of Chinese capitalism and many more which can affect the stock market so much so that even a good company in terms of quality can generate lesser profits as expected. Also, the price can be another area to look at as it is an excellent way to know your value bets.


The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.


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