How do I create an investment strategy?

Whether you're investing for the first time or just getting serious about your financial goals, all investors should set an investment strategy that suits their needs.

Define your goals

Ask yourself why you're investing - your goals will help shape your strategy. Some common investing goals include:

• Saving for a home deposit 
• Building long-term wealth 
• Funding future travel or education 
• Preparing for retirement

Tip: Be specific when defining your goals. "Grow my money" is vague, whereas "save $20,000 in 5 years for a house deposit" is a clearly defined goal.

Know your time frame

Your investment horizon - how long you plan to invest - affects the types of investments you might consider.

• Short-term (under 3 years): You may want to limit risk and focus on capital preservation.
• Medium-term (3–5 years): A balanced approach may suit you.
• Long-term (5+ years): You may be able to take on more risk for potentially higher returns.

Understand your risk tolerance

Everyone reacts differently to market ups and downs. Ask yourself how you would feel if your investment dropped 10% in a month. Would you sell, hold, or buy more?

Your comfort with risk will help determine your asset allocation, how much you invest in shares, bonds, cash, or other assets.

Learn more about the risks of investing in shares.

Choose an investment approach

Do you want to actively manage your investments, or passively? Here’s the difference:

• Active investing: Investing in individual shares and trying to outperform the market.
• Passive investing: Using diversified funds (like ETFs or managed funds) to track the market.

If you're new to investing, a simple, diversified approach may be easier to manage while you learn the ropes.

Decide how much to invest

Start with what you can afford. You don’t need a large sum to begin and many platforms allow you to start with a minimum investment of a few hundred dollars.

Tip: Make sure you’ve set up an emergency fund before investing. This helps you avoid selling investments in a downturn to cover unexpected costs.

Stay consistent

Investing regularly can help your portfolio weather market ups and downs. A strategy that can be used is known as Dollar cost averaging, which is investing a fixed amount at regular intervals.

Review and adjust your strategy

Your strategy isn’t set in stone. Review it at least once a year or when your goals or circumstances change.

The Academy is intended to provide general information of an educational nature only. Any securities or prices used in the examples given are for illustrative purposes only and should not be considered as a recommendation to buy, sell or hold. Past performance is not indicative of future performance. Investing carries risk.

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The information on this page has been prepared without taking into account your objectives, financial situation or needs. For this reason, any individual should, before acting on this information, consider the appropriateness of the information, having regards to their objectives, financial situation or needs, and, if necessary, seek appropriate professional advice.

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