Investing Strategies
Choose a strategy you can stick to: buy-and-hold indexing, rules-based rebalancing, dividend investing, value vs growth, and momentum.
From concepts to a rules-based plan
Once you understand the investing basics and how ETFs work, the next step is choosing a strategy. A strategy is less about predicting the future and more about deciding in advance how you will behave in different market conditions.
This section compares common approaches in plain English so you can pick a simple, repeatable plan—and write down rules you’ll actually follow when markets get noisy.
Core strategies we cover
These guides walk through the most common strategies individual investors consider, along with their trade-offs and implementation details.
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Buy-and-hold indexing
Own diversified index funds or ETFs and hold them for the long term, rebalancing periodically instead of trying to time the market.
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Rebalancing 101
Set target weights for stocks, bonds, and other assets—and reset them to target on a fixed schedule or when they drift past a band.
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Dividend investing (overview)
Focus on companies or funds that pay regular dividends, and understand the trade-offs between yield, growth, and diversification.
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Value vs growth
Compare strategies that tilt toward undervalued (“value”) stocks or higher-growth companies, and see how factor tilts fit into a core portfolio.
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Momentum overview
Learn what momentum investing is, why it can be volatile, and why it is usually best treated as an optional satellite strategy.
Tip: You don’t need to use every strategy. Most investors are better off picking a simple core approach and sticking with it.
Choosing a strategy you can stick to
The “best” strategy on paper doesn’t matter if you abandon it during a downturn. Start by matching your approach to your temperament, time horizon, and willingness to monitor your portfolio.
- Prefer simplicity? Focus on buy-and-hold indexing with broad ETFs.
- Comfortable with spreadsheets? You may add rule-based rebalancing or modest factor tilts.
- Hate volatility? Hold more bonds and avoid concentrated or speculative strategies.
Strategy fit checklist
- You can explain the strategy in one or two sentences.
- You know what to do during a 20–30% market decline.
- You have a written plan for contributions and rebalancing.
- You are willing to follow the rules for at least 5–10 years.
Turn ideas into simple written rules
Strategies become real when they are written down. Use a short, one-page plan that covers:
- Goal: What the money is for and when you’ll likely need it.
- Asset mix: Your target allocation (for example, 70% stocks / 30% bonds).
- Contributions: How much you add and how often.
- Rebalancing: How often you reset to target, or what drift triggers an adjustment.
- Behavior rules: What you will not do (e.g., no panic selling, no short-term market timing).
As you write your rules, you may find you need to revisit Risk vs Return, Asset Allocation, or ETF Essentials to refine your assumptions.
Use tools to test your strategy
Before committing real money, use calculators to see how your plan behaves under different savings rates, time horizons, and return assumptions.
- Retirement Savings Calculator — check if your strategy and savings rate are on track.
- Compound Interest Calculator — see how contributions and returns compound over time.
- CAGR Calculator — understand the average annual returns of a chosen strategy over a period.
If the numbers don’t match your goals, adjust contributions, asset allocation, or timing— not by chasing a more aggressive strategy than you can handle.
Investing strategy: quick FAQ
What is an investing strategy?
An investing strategy is a set of rules that guides how you allocate money across assets, how often you buy, when you rebalance, and how you respond to market moves. A good strategy is simple, repeatable, and grounded in your risk tolerance and time horizon.
Which strategy is best for beginners?
Many beginners start with buy-and-hold indexing using broad stock and bond ETFs, plus periodic rebalancing. This keeps costs low, reduces decision fatigue, and aligns well with long-term goals. More complex strategies like factor tilts or momentum are usually optional add-ons, not core starting points.
How often should I rebalance?
Common options include rebalancing once or twice a year or when your allocation drifts a certain amount (for example, 5 percentage points) from your target. The key is to choose a reasonable rule in advance and stick to it, instead of reacting emotionally to headlines.
Can I combine strategies?
Yes, but keep your core simple. Many investors use a buy-and-hold core with periodic rebalancing and may optionally allocate a small portion to dividend, value, or momentum tilts. The more strategies you combine, the more important clear written rules become.
Next: from strategy to daily behavior
A written strategy is the bridge between theory and real-world behavior. The final step is aligning your accounts, contributions, and day-to-day decisions with that plan.
- Revisit Investing Basics to confirm your foundations.
- Review ETF Essentials to choose the right building blocks.
- Use the Tools hub to stress-test your savings and return assumptions.