Financial Strategy



Financial Strategy

Introduction

In this paper, we will assess the financial strategies of new graduates. It is important to note that financial graduates require to optimally use their financial resources and take investment decisions to maximize savings and return. Investment is very important for individuals at different stages of life. It not only increases the savings of the individual and enhances the total capital or investment of the company.

Discussion

A student need to assess his or her requirement and then design a financial strategy. He may have to take loan from a bank or may ask seek financial assistance from the family to help him or her complete studies. The student can also look to score well and get a merit scholarship that will help him or her to complete the studies.

The investor who wants to invest money in the stock market i.e. in shares, he makes a portfolio where he select certain stocks in order to diversify the investment. The main purpose is to avoid risk and to look for higher returns. A skilled navigator can go through adverse weather and maybe even faster progress towards the goal. However, a good sailor knows when to change direction and when to lower the sails and take the helm. A skilled investor is like a good sailor.

The investment strategy is a set of methods and tools for portfolio management. The purpose of its application is increasing the capital of the investor. Currently market comprises of five major investment strategies. Nevertheless, it should be noted that it depends on the investor how much risk he can bear and what is the objective when he is entering in to the market.

Suppose a graduate has £20,000 to invest, as parents provided them the money to invest. Observing the behaviour of investors on the Securities Market, we can see a permanent, recurring tasks performed by many of them. They are so called investment styles that characterize the different types of investor psychology. On the basis of different types of stock market players can distinguish some of the most popular investment strategies in the stock market (Reilly, Frank & Brown, 2003).

As the aim of the investor is capital accumulation and moderate risk is acceptable with the 2 years of time duration, for this we will select an active strategy. In this strategy investor buys and sells the securities on an ongoing base. As the purpose is the capital accumulation, active strategy seeks to sell the shares when prices are increases and buy when prices are down for the maximum profit. Note that the portfolio is constructed in a way to diversify the risk, as well not only to maximize the profit.

At this strategy investor open predominantly short and medium term position, and can withdraw money from circulation partially or completely in almost any given time. Moreover, the active strategy involves on the one hand tighter control on current risks by limiting the amount of losses in each ...