Investment Strategy

Investment strategy

A strategy, or plan of attack, an investor uses when deciding how to allocate capital among several options including stocks, bonds, cash equivalents, commodities, and real estate. The strategy should take into account the investor's tolerance for risk as well as future needs for capital.

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Investment Philosophy

Basic standards and beliefs guiding one's investing practices. Factors influencing one's investment philosophy include risk tolerance, investment goals, and personal beliefs about what guides markets. Investment philosophies may vary widely from each other. For example, when investing in securities, one investor may use technical analysis, which utilizes statistical information exclusively, while another may use fundamental analysis, which uses both quantitative and qualitative information. It is also called an investment strategy. See also: Naive diversification, Markowitz Portfolio Theory.