How I Doubled My Investment Returns Using Systematic Strategies
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Chapter 1: Understanding Market Analysis
Everyone has a keen interest in finances; after all, money governs many aspects of our lives. During the COVID-19 pandemic, my investment portfolio plummeted by 40%. Sleepless nights followed as my investments turned red, and optimism faded. With markets shuttered and economic activity at a standstill, I lost my job, intensifying my worries.
My situation felt bleak, and I struggled to meet my financial obligations. Moving back in with my parents provided some relief from bills and rent, allowing me time to reflect and explore the rural landscape. This period of reflection led me to establish a small business. As circumstances improved, I regained employment and resumed my stock market investments.
The most prevalent error among investors is the reluctance to hold onto profitable stocks. During the pandemic, despite my portfolio's significant decline, I chose to maintain my positions. I understood the pandemic wasn't a decade-long crisis.
Taking calculated risks ultimately reaped rewards.
Section 1.1: The Importance of Holding Stocks
Many investors shy away from taking losses, but it’s essential to choose stocks with strong fundamentals and positive technical trends. If a stock's foundation is solid, it is likely to appreciate over time. By adhering to this straightforward approach, I remained invested throughout the pandemic, and the subsequent market recovery was nothing short of remarkable, leading to substantial profits.
Subsection 1.1.1: The Art of Stock Picking
Chapter 2: Investing in Strong Fundamentals
Stock picking is a skill honed through experience. I prioritize stocks with strong fundamentals. But what does that entail? Before investing, it’s crucial to evaluate a company's performance by reviewing its profit and loss statements, revenue growth, and debt levels.
In the early stages of my investing journey, I incurred losses due to poor stock choices. Through practice and paper trading, I learned which trades were profitable and identified ineffective strategies.
Section 2.1: Exploring Mutual Funds
Another effective method for generating returns in the stock market is investing in mutual funds.
How does mutual fund investing function? You should select funds based on your financial goals. Although stock market investments carry risks, options like the S&P 500 index historically provide an average return of around 12%, significantly exceeding current fixed deposit rates. These investments yield even higher returns when held over the long term.
Investing in the stock and commodity markets is a strategic way to outpace inflation, allowing your wealth to multiply through compounding effects.
Section 2.2: Cultivating an Investment Habit
Developing an investment mindset is crucial. It requires an understanding of financial principles and a commitment to achieving financial independence in the shortest time possible.
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