Investment Strategies: Which One Is Right for You?

All successful investors have at least one thing in common: a solid investment strategy.

Think of your investment strategy as a roadmap that guides you toward your preferred financial destinations. It outlines your approach and points you in the right direction during soaring or turbulent markets.

But you shouldn’t pick just any roadmap — your strategy should fit your needs, wants, and lifestyle.

What are the basic investing principles I should know?

Every investor starts somewhere. Understanding a few fundamental principles can help you build confidence and make better decisions as you grow your portfolio.

The most important principles include setting clear goals, thinking long-term, understanding your risk tolerance, diversifying your investments, and staying invested rather than trying to time the market. These aren’t just rules — they’re proven approaches that help investors build wealth over time.

1. Setting investment goals keeps you on track

Investing without a goal is like getting in your car without a destination in mind. Clear goals help you determine how much you need to save, how long you need to save, and where to invest based on your risk tolerance and profit goals.

For instance, investing for retirement in 30 years looks very different from saving for a new car in five years. Generally, longer-term investors can handle more volatility, while shorter-term investors may prefer safer assets.

2. Investing builds wealth over time, not overnight

Financial markets are notorious for short-term ups and downs that can make investors feel queasy. But if you’re investing over the long term, these dips are just part of the wealth-building process.

Volatility goes in both directions, and riding the waves up is how you overcome normal investment losses. Ideally, you’ll stay invested for years or even decades to take advantage of asset appreciation and compound interest, where your profits grow profits.

3. Your risk tolerance matters — a lot

Every investor has their own risk tolerance when it comes to losing money. Your risk tolerance reflects how much risk you can stomach based on your age, investing timeline, and financial situation.

Emotions also play a big role. For some investors, a rapidly changing market presents buying opportunities; for others, it sparks panic. If volatility makes you nervous, you may prefer to trade potential gains for lower-risk, lower-anxiety investments.

4. Portfolio diversification hedges against risk

Diversification involves spreading your investment dollars across different asset classes, industries, and regions. By investing in several assets, you hedge against the risk that one (or more) won’t perform.

Spreading the risk around also increases your portfolio’s resilience during market downturns. When one part of your portfolio sinks, the rest of your assets might see gains (or at least smaller losses).

5. Time in the market beats timing the market

New investors may be tempted to time the market by buying stocks at perceived lows and selling at perceived highs. But typically, keeping your money in the market long term generates larger profits by minimizing fees and capitalizing on compound interest.

One famous example is the Warren Buffett bet. Back in 2008, Buffett bet hedge fund managers that a passive, low-fee index fund would outperform actively traded hedge funds in the long run. Over ten years, Buffett’s theoretical $1 million investment generated $854,000 in profits, while five competing hedge funds earned just $220,000.

How Quicken Simplifi helps you track your progress

Quicken Simplifi’s investment tracking features let you connect all your investment accounts — whether it’s a brokerage account, 401(k), IRA, or even crypto. You can track your portfolio performance with real-time updates, view your balance over time, and analyze performance metrics like Internal Rate of Return (IRR) and Time-Weighted Rate of Return (TWR). Having all your investments in one place makes it easier to see if you’re on track to meet your goals.

What investment strategy should I choose?

Your investment strategy guides your decision-making process. Each strategy focuses on a different aspect of investing, like generating growth, minimizing risk, or preserving capital.

The right strategy for you depends on your goals, timeline, risk tolerance, and how involved you want to be in managing your investments. Many investors mix and match strategies to build an approach suited to their individual needs. Let’s explore seven common strategies to help you find your fit.

1. Dollar-cost averaging

Dollar-cost averaging (DCA) focuses on adding to your investments on a regular schedule. With DCA, you make regular contributions to your portfolio over time, regardless of how the market performs — like investing $75 per week or $300 per month.

DCA helps investors avoid the temptation to time the market and reduces the impact of market volatility by smoothing out your purchase price over time.

Pros:

• Passive approach with automated deposits
• Removes some emotional elements of investing
• Requires minimal maintenance

Cons:

• Risk of increasing your average purchase cost
• Requires steady cash inflows
• Doesn’t guarantee profits or protect against losses

2. Passive investing

Passive investing involves buying and holding assets for years or decades. Passive investors generally believe that holding assets over the long term yields greater profits than short-term trading.

Many investors use passive methods like index investing to minimize costs and increase diversification by buying funds that track market indexes like the S&P 500 or Nasdaq Composite.

Pros:

• Lower lifetime trading costs
• Easy to diversify with index funds
• Typically outperforms active trading strategies

Cons:

• Takes time to build wealth
• Important to avoid panic-selling in rough markets
• You won’t outperform the market

3. Active investing

Active investing is the opposite of passive investing. Under this strategy, investors (or fund managers) make frequent trades in an attempt to beat the market.

Active investing typically requires advanced technical or fundamental analysis. Investors may also pair this strategy with day trading or momentum investing that follows current market trends.

Pros:

• Making the right trades can produce large returns
• Plenty of funds to choose from if you don’t want to do your own research

Cons:

• May generate higher short-term capital gains taxes
• Trading fees and commissions eat into gains
• Typically relies on complex analysis

4. Value investing

Value investing — Warren Buffett’s preferred strategy — involves investing in assets you believe are undervalued. After buying in, you may hold assets for years or decades until they reach their true value.

Value investing is based on the idea that irrational markets present opportunities to buy stocks at discounted prices. Some investors select their own assets, while others invest in value-based ETFs and mutual funds.

Best for: Long-term, buy-and-hold investors willing to build wealth over time

Pros:

• Long-term opportunities for gains
• Supported by financial analysis
• Value investments are more likely to pay dividends

Cons:

• Undervalued assets may remain undervalued or decline further
• Requires thorough research and analysis
• Investments may take time to realize their value

5. Growth investing

Growth investing involves buying assets that you believe have the potential to explode in value. Unlike value investing, growth investing is a shorter-term strategy that considers a company’s current health and near-term potential.

Many growth companies offer unique, in-demand products or services that competitors can’t easily provide. Recently, this space has been dominated by tech start-ups, green energy businesses, and emerging markets.

Best for: Investors looking for the next big trend who don’t prioritize dividends

Pros:

• Potential for substantial capital appreciation
• Capitalizes on emerging trends and companies
• Easy to start with growth-focused funds

Cons:

• Growth stocks typically don’t pay dividends
• Increased risk and volatility
• No guarantee of success

6. Socially responsible investing

Socially responsible investing (SRI) aims to pair investor values with positive, long-term asset performance. SRI puts your dollars where your values and moral compass lie.

You can tailor SRI assets toward issues that matter to you, such as avoiding “sin stocks” (alcohol, gambling, etc.), promoting environmentalism, or supporting community outreach.

Best for: Investors who want their investments to make a positive impact

Pros:

• Invest with your values
• Reward ethical companies
• Diversify an existing portfolio

Cons:

• SRI-only portfolios might see limited gains
• Mixed research on performance vs. standard indexes
• The definition of SRI is subjective

7. ESG investing

ESG stands for “environmental, social, and governance” investing. It’s similar to SRI, except where SRI investments exclude certain industries, ESG funds include companies that incorporate ESG principles.

ESG investors look for companies that incorporate one or more ESG principles into their business practices, such as using green energy or paying employees well. Some research suggests that ESG investments are more sustainable and profitable in the long term.

Best for: Investors who want to align investments with sustainability goals

Pros:

• Support positive change while investing
• ESG investments may perform better long-term
• Some research shows ESG funds are less risky

Cons:

• ESG ratings are subjective
• May exclude outperforming companies
• Some ESG funds charge higher expense ratios

How can I get started with the right strategy?

The best investment strategy is one you’ll actually stick with. Start by clarifying your goals, understanding your risk tolerance, and deciding how involved you want to be in managing your investments.

Remember, you don’t have to pick just one strategy. Many successful investors combine approaches — like using dollar-cost averaging with passive index investing, or mixing value and growth stocks in their portfolio. The key is finding a combination that fits your lifestyle and helps you sleep at night.

How Quicken helps you implement your strategy

Whether you’re a passive investor checking in quarterly or an active investor monitoring daily changes, Quicken Simplifi keeps all your investments organized in one place. Track your portfolio performance, monitor your asset allocation, and see how your investments are helping you reach your goals. Plus, Simplifi’s retirement planner helps you project whether you’re on track for a financially secure retirement based on your current investment strategy.

Frequently Asked Questions

Can Quicken Simplifi track investments across multiple brokerage accounts?

Yes, Quicken Simplifi can connect to and track investments across all your accounts — including multiple brokerage accounts, 401(k)s, IRAs, and even cryptocurrency holdings. This gives you a complete portfolio view in one place, making it easier to monitor your overall asset allocation and ensure you’re properly diversified.

Does Quicken Simplifi calculate investment performance metrics?

Yes, Simplifi calculates both Internal Rate of Return (IRR) and Time-Weighted Rate of Return (TWR) for your investments. You can view performance over any time frame you choose and filter by individual accounts or see your entire portfolio’s performance. This helps you understand if your investment strategy is working as expected.

Can I use Quicken Simplifi to track my progress toward retirement?

Absolutely. Simplifi includes a retirement planner that lets you input your current age, investment balances, annual contributions, expected returns, retirement age, living expenses, and more. It then generates projections showing whether you’re on track for retirement and lets you experiment with different scenarios to see how changes would impact your plan.

How does Quicken Simplifi help with dollar-cost averaging?

While Simplifi doesn’t automate investments directly, it helps you track your regular investment contributions by automatically importing and categorizing transactions from all your connected accounts. You can see your investment contributions in your spending plan and track whether you’re staying consistent with your dollar-cost averaging strategy.

Can Quicken Simplifi show me if I’m properly diversified?

Simplifi provides a complete view of all your holdings across every connected account, updated with real-time market data. While it doesn’t provide specific diversification analysis, having all your investments visible in one place makes it much easier to see your overall asset allocation and identify any concentration risks in your portfolio.

Can I track both taxable and tax-advantaged accounts in Quicken Simplifi?

Yes, Simplifi can connect to both taxable brokerage accounts and tax-advantaged accounts like traditional IRAs, Roth IRAs, and 401(k)s. The retirement planner even lets you specify different balances for “already taxed” investments (like Roth IRAs) and “tax-deferred” investments (like traditional 401(k)s) to create more accurate projections.

How current is the investment data in Quicken Simplifi?

Simplifi updates your portfolio with real-time market data, showing you current values, today’s changes, and total gains or losses. It also includes an integrated news feed that provides curated financial news relevant to your specific holdings, helping you stay informed about events that might impact your investments.

Does Quicken Simplifi work for both active and passive investors?

Yes, Simplifi accommodates both investment styles. Passive investors can check in periodically to monitor long-term performance and ensure they’re on track for retirement. Active investors can use the real-time updates, performance metrics, and news feed to stay on top of daily changes. The platform is flexible enough to support however often you want to review your investments.