Introduction
When you take the risk of being a freelancer, you also take the chance of having either too many projects one season or none at all in another. When you live with that level of uncertainty, you need to put your income to work. In other words, you need to have your savings do more than just sit in your bank account. Many freelancers in the business miss out on investing because of the lack of awareness about their options in the market or they simply get too overwhelmed by its volatility.
As a freelancer, you can never have enough time. With life being divided into unequal parts of deadlines, long-drawn client meetings, and schedules that disregard the societal construct of time, investing may seem like a lot of effort. But it doesn’t have to be.
With the right armor of investment techniques, you can lounge in your living room, or catch up on your long put-off hobbies and have your savings work hard on your behalf.
A lot of freelancers and creative professionals are realizing the perks that come with investing. A lot of them wish to try their hands at it but simply lack the informational resources. It’s a stretch to aim to become the Oracle of Omaha within one month of investing – But, hey, there’s nothing wrong in dreaming.
But the following Investment Techniques might come in handy in your journey to become the next Warren Buffet (or at least, dream of it).
Investment techniques are techniques that allow new investors to choose where to and how to invest while keeping their expected returns, risk appetite, age of retirement, and choice of the sector in mind. These techniques act as skeletal frameworks according to which investors can plan their goals and determine how to reach them.
1. Technique One – Growth Investing
Growth investing entails choosing a holding period that is based on the value that an investor wishes to create in their portfolio.
As a growth investor, if you believe, or have a gut feeling that a company will grow in the following years and the value of its stocks would increase, you go ahead and invest in these entities in the market to build the corpus value.
Your holding period as a freelancer will also be a sum total of your experiences and expectations. It will be determined by your current financial goals, your long-term plans, how soon you wish to retire, etc.
2. Technique Two – Value Investing
The second technique of value investing involves guiding your investment decision in the direction of the intrinsic value of the value, often because some companies, referred to as the Underdogs of the Market, are often incredibly undervalued in the market.
The logic behind Value Investing is that when the market goes into the phase of correction. It will correct the values of these companies, as a consequence of which their prices will then shoot up.
3. Technique Three – Income Investing
If your reason for investing is to generate a dependable and steady source of income, then Income Investing might be it for you.
The Income Investment strategy is solely focused on building a robust investment portfolio that generates a regular income from stocks. There are two specific kinds of cash income which you as a freelance investor can earn dividends and fixed Interest Income from Bonds.
4. Technique Four – Contrarian Investing
Contrarian Investing is all about spotting the reds in the market.
Contrarian investors buy stocks when the market is down when the graphs are downward sloping and red. This downtime is usually found during the stress periods of an economy – in war, calamity, natural disasters, and economic and political turmoils.
However, simply buying the red in the market won’t always generate greens It is important to look out for companies that can generate value and have a dependable future.
5. Technique Five – Momentum Investing
Similar to but slightly different from Growth Investing, Momentum Investing considers a particular company’s share’s price momentum instead of the average revenue growth.
It is a trading strategy wherein you buy securities whose momentum seems to rise and then sell them when it appears that they have peaked.
The idea behind momentum investing as an investment strategy is to find buying opportunities in short-term uptrends and sell them when they begin to lose momentum.
On the whole, momentum investing generates considerably good returns, but they run the risk of potential pitfalls. Momentum Investing is best optimized with a bunch of other investment strategies at play together.
6. Technique Six – Factor Investing
Factor investing is an evidence-based approach that demands that the process of selecting stocks to be governed by pre-defined metrics like value, growth, momentum, quality,,, and volatility. This allows you to objectively determine the change and growth in all the parameters concerned and make your decision wisely.
You can also opt for Exchange Traded Funds or ETFs that use these factors while indexing stocks. As a hired freelancer, ETFs can come in handy in your busy schedules as they help you construct portfolios based on factual data rather than clairvoyant predictions and assumptions.
7. Technique Seven – Multi-Asset Investing
The idea of Multi-Asset Investing is simple. It is built on the tenet of diversification.
Diversification is the golden rule of investing. Diversification allows you to have a wide array of assets in your armour that perform differently in different market situations.
It is built on the assumption that markets by nature are incredibly volatile. So even if one of your stocks tanks, you must have some safety sectors buttressing its downward graph.
You can diversify your portfolio by:
- Asset classes – For instance, buying shares alongside a gold-based mutual fund.
- Sector – Invest in different economic sectors. Throw in some pharmaceuticals besides the FMCG sector. Try multiple different permutations till you feel like you’ve cracked the market sentiment.
- Geographical Sectors – Take advantage of the Startup boom in India while also relying on the stability of American MNCs.
While there isn’t an ideal number of stocks that you must own, financial experts suggest that the range between 10 to 30 is a good space to experiment within.
The higher the number of asset classes in a portfolio, the lower will be the volatility. This will also considerably lower portfolio risks.
Conclusion
The world of investing is massive. As a freelancer that is still shifting into the investing skin, finding your natural investment strategy will require due consideration, research, and experimentation.
To know if a technique truly interests you, dig deep into it and see if its modus operandi has you asking questions. If you’re asking questions, it is a clear indication of your curiosity and interest in the same.
Having your share of skills and experience is likely to come in handy in times of confusion. (There will be plenty!)
It is a good idea to start investing in sectors and industries you’re accustomed to. For instance, if you actively hire content writers daily, you’ll naturally have more insight into how media and content companies work. STarting there might be a good kick start to your portfolio.
A lot of investing comes with trial and error, strategizing, and re-strategizing. The goal is to keep at it and take your risks prudentially!
Author Bio
Hetvi works as a Product Associate at Refrens.com – Online Invoice Generator & India’s most powerful platform for freelancer’s growth. She has worked for some renowned companies as a Brand and Digital marketing associate. You can follow Refrens.com on Twitter, LinkedIn, and Instagram.
