Types Of Active Investing Our Dallas Financial Advisors Suggest
Investing is a tool that allows investors to put the money they have saved to work. If done properly—early, consistently, and well-planned—it can build a substantial amount of wealth that one can live on in one’s golden years. In this article, our Dallas retirement planning expert will discuss the types of active investing your Dallas financial advisor may recommend.
Active vs Passive Investing: Which Is Best for Your Investment Portfolio?
Generally, there are two types of investing, active and passive investing, which differ mostly on your involvement as the investor when it comes to your investment portfolio. investment portfolio.
Passive Investing
Passive investing, on the other hand, involves less buying and selling, which is exemplified by the phrase ‘buy and hold.’ Passive investors buy into index funds or mutual funds.
Active Investing
Active investing is a hands-on approach to investing with frequent buying and selling. This type of investing is employed by fund managers and active market participants, hopefully under the guidance of a competent Dallas financial planner. Usually, our Fort Worth financial planners would steer our clients towards passive investing but active investing also has its merits. You don’t need to pay the fees mutual funds charge if you invest on your own. With an actively-managed portfolio, you have the flexibility that other investors in index and mutual funds don’t have. You can build an investment portfolio, with guidance from your Dallas financial advisor, that is tailor-fit based on your income level, retirement goals, and time horizon. Should you decide on active investing, consider the following techniques.
Our Fort Worth Financial Planner Suggests Dividend Investing
When investors own stocks of a company, they literally own portions, albeit small, of that company. Companies may opt to distribute some of their earnings to their stockholders in the form of dividends. Dividend investing is a form of active investing where your Dallas financial advisor would guide you to invest in dividend-paying stocks. The advantage of dividend-paying stocks is regular cash flow (although not always guaranteed) while still maintaining the potential for stock appreciation
Our Dallas Financial Planner Suggests Sticking with Blue-Chip Companies
Active investors who are in it for the long run should listen to their Dallas financial advisor and stick with Blue-Chip companies. These are companies that are well-established, reputable, and financially sound. These are your “boring” companies that show little but consistent growth through the years. While up-and-coming companies are more exciting and have higher potential for growth, Blue-Chip companies have a proven track record of stable growth and can better weather and bounce back during downturns in the market.
Dollar-Cost Averaging
Dollar-Cost Averaging (DCA) is investing the same amount of money in the same stock or sets of stock at regular intervals. DCA is a technique employed by our Dallas financial advisors because it is an easy way of active investing. When DCA is used, investors buy more of a stock when it is priced low and buy less when it is expensive. This outperforms those who are trying to buy low and sell high because no one can predict the movement of the market.
Start Building Your Investment Portfolio
Whether it is active or passive investing, buy and hold, Dollar-Cost Averaging, or timing the market, the highest determinant of investing success is time. Call us now and schedule a consultation with our Dallas financial advisors. Our Fort Worth financial planners will guide you every step of the way towards the retirement of your dreams.
