Choosing your investment strategy

When making your investment plans, you should firstly consider your goals, timescales and attitude to risk. Then, depending on your investment knowledge and spare time, think about whether you want to be hands on (active) or hands off (passive).

It might be that you'd prefer investing in companies that you are familiar with, since you’ll find it easier to keep track of them. If ethics and social responsibility are important to you, take a look at companies’ environmental, social and governance (ESG) policies. interactive investor has compiled the UK's first rated list of ethical investments to help you invest ethically, which you can see here.

Common investment strategies

Growth

Invest in companies which have good recent and projected growth. Look out for companies which are:

• Expanding via acquisition
• Developing new technology, products or services.
• Investing heavily in the business.
• Entering new overseas markets.
• Attractive takeover targets. 

Value

Use Fundamental Analysis  to identify and invest in stocks that might be undervalued. You are looking to make a profit by holding onto them until they reach their true value.  

Income

Generate a cash income by investing in companies that have a history of paying good dividends (high yield). Larger ‘blue chip’ companies are popular.

Buy and hold

Buy a stock and keep it for a long period of time, irrespective of market fluctuations. This is known as a passive investment strategy.

Balanced

Benefit from a combination of growth and income. Look out for companies that pay out a proportion of their returns as dividends while retaining a certain amount for ongoing investment in pursuit of growth.

Thematic

Thematic investing focuses on future global trends which are predicted to be a success. These include themes like clean energy, robotics, AI, or healthcare advancements.

How to build an income ISA portfolio

What to invest in when getting started: a beginner’s guide