Making an Investment Plan: Tactical vs Strategic Moves

When it comes to creating a successful plan, it's important to understand the difference between tactical vs strategic investment. This is an issue that can be confusing, but defining the differences between investment tactics and your overarching investment strategy is the real key to making money in the market.

Planning Strategically

Just about everyone who has ever paid to have some work done has heard the old saying, “You can have it done right, fast, or cheap. Pick two.” You can think of an investment strategy in a similar way.
Every strategy consists of three elements -- risk, time, and yield -- and it's the interplay between those factors that lead you to a perfectly tailored investment strategy.


Every investment strategy comes with the risk of losing -- or greatly diminishing -- your principal investment. Whether they're short-term or long-term, the level of risk that you're willing to assume generally impacts the yield of the final investment. Typically, high-risk opportunities offer a high return, while low-risk investments have lackluster returns.


Figuring out what sort of timeframe you're working with will go a long way toward dictating which investment strategy is right for you. If you start investing when you're young, it's easy to choose investments which pay off steadily over the long term. Investors who need to make money fast will typically assume much higher risks.


The final piece of the investment strategy puzzle is yield. Obviously we'd all like to make investments which pay off big, but in order to make a lot of money in the market we all have to assume some level of risk. The safest investment strategies are the ones based on the lowest acceptable yield in order to fulfill your goals. High yield strategies carry with them much higher than average risks.

Putting It All Together

Just like the old saying that we touched on earlier, every investment strategy can be summed up in a simple way: “You can have high-yield, low-risk, or short-term investments. Pick two.” The choice that you make will ultimately be dictated by what you expect to gain from the market.

Investing Tactically

Investment tactics are the plans and steps that you must take in order to meet the goals you've laid out in your investment strategy. For instance, when setting up a retirement fund that won't be touched for decades, the best course of action is often to tie yourself to mutual funds and other investments that are indexed to the market as a whole.

There are a whole range of investment tactics, and each one is appropriate for a different strategy. Often, you'll be mixing and matching tactics in order to get the results that you're looking for. has laid out just a few common investment tactics below.

Fundamental Analysis

If you love nothing better than combing through profit and loss statements, following the latest earnings forecasts, and learning everything you can about the management styles of each principal member of a company's senior management staff, fundamental analysis might be a very solid tactic for you to take. It tends to be most effective in the mid-term, either months or years down the line, as management has a chance to make internal changes which slowly begin to affect share prices.

Cyclical Investing

Nearly everyone is aware that the market moves in yearly cycles. For instance, the price of crude oil tends to spike in the summer months, while home heating oil is most expensive in the winter due to simple supply and demand. Identifying these trends and capitalizing on them can yield high returns with little risk, although it will often take many months to be able to put a plan like this into action.

Buy And Hold

This tactic has also been called “lazy investing” and the whole point is to find stocks which have performed well in the past and are likely to continue to grow. Buy and hold tactics are excellent for mid-term investors who are familiar with a handful of stocks who have a proven track record of performance. Once bought, the investment is held until the stock price reaches a set value where it is sold for a profit.

Growth Investing

If you're an expert in a particular segment of them market, it's possible that you have good insights about which companies are poised to make big money in the future. This high-risk, high-return strategy is often employed in short-term strategies in order to make big profits at the risk of big losses.

The Perfect Blend of Tactics and Strategy

Unfortunately there is no absolutely perfect blend of tactics and strategy for most people. Some long-term investors prefer to take part in mutual funds, or even hedge funds, in order to let investment gurus with proven track records take risks in their place. Whatever your individual investment strategy is, and whichever tactics you prefer to use in order to reach your goals, the best advice that anyone can give you is to stay open-minded and fluid, making changes to your tactics as the situation warrants and doing everything possible to keep your long-term strategy profitable.

By Aaron Phillips
Aaron Phillips is a financial researcher and journalist based out of Michigan. He regularly writes the IG Daily and IG Weekly columns.

Copyrighted 2016. Content published with author's permission.

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