Investing in stocks is something is difficult to do.
However, if you can have a consistent strategy, the payoff can be lucrative in the long term and help you beat the 2-4% FD rate.
Before we dive in, these are strategies I use when investing in US stocks. I prefer the US stock market, Nasdaq instead Bursa as the returns are quicker given the size of the market.
Here are my 5 strategies when it comes to stock investing:
Strategy 1: Invest in the S&P 500
We start with a safe and steady strategy.
The S&P 500 is a stock market index that tracks the stock performance of 500 of the largest companies listed on stock exchanges in the United States.
Your expected returns in the long term of investing in the S&P 500 is on average annual return 10.26%, which is pretty decent.
The theory to justify investing in the S&P 500 is as follows:
When the US economy grows, the companies that would have contributed to its growth are likely to come from the top listed companies in the US, thus increasing investors’ confidence.
As profits continue to increase, eventually the share price will increase as well in the long term.
If you are interested in shares investing, sign up for Interactive Brokers to start trading.
Strategy 2: Dividend Investing
The beauty of buying high dividend stocks is you can get the benefits in 2 ways.
Firstly, the stock price could increase, and you will earn from capital appreciation.
Secondly, if you hold the stock, the company will pay you a dividend depending on how much you invested in the stock.
Some of the higher dividend yield stocks (5-6%) include Pfizer, O Realty Income, Doc HealthPeak etc.
A notable mention to O Realty Income which is one of the oldest real estate investment trusts (REITs).
One attractive thing about them is they give out monthly dividends instead of quarterly/yearly like most companies. And they have given over 600+ consecutive monthly dividends to shareholders!
Strategy 3: Invest in Undervalued Stocks
This strategy is interesting yet simple.
Here’s what you do. Find companies where the share price has dropped around 40-80%.
From those list of companies, check the financials to see if the past 3-4 quarter revenue and net profit have increased by at least 5%.
Doing these 2 steps would have narrowed down the list of companies.
Which brings us to the final step. Use ChatGPT or google to find out the reason for the sharp decline in share price.
Once you have gotten the reason, evaluate whether the reason makes sense or the stock is only dropping along with other stocks due to the temporary bear market which brings down most stocks.
Ask yourself, are the reasons emotional or factual?
Note: This is where the revenue and net profit increase come in handy, as you want to know the drop is not due to declining revenue or profit, which indicates the drop is justified.
To test this strategy, as of January 2025, I have bought Novo Nordisk at $81 and AMD at $117 as both have met the criteria we discuss above.
Let’s check back again in 1 year.
Strategy 4: Observe Kids and Teenagers
I believe the children are our future – Whitney Houston.
I believe this is also true when it comes to stock investing.
Back in 2008 to 2015, the young Gen Y back then were 3 popular apps (Facebook, Instagram and Whatsapp).
Instagram and Whatsapp was then acquired for Billions by Facebook, which all 3 is now under Meta.
Meta went for IPO in 2012 with a share price of $38.
Fast forward today on 31 January 2025, Meta’s share price is $689.
If you had invested $10,000 in Meta in 2012, now you would have $181,315, which is a 1,000+% absurd return.
Let’s fast forward to today, what apps are kids and teenagers using the most?
Based on observation, they are using the following:
-Roblox
-Tiktok
-Youtube
-Netflix
From the 3 above, only tiktok is not listed.
Let’s look at the 1 year share price comparison for Roblox, Netflix, and Youtube (under Google, Alphabet)
Roblox: 80.7% return
Netflix: 72.1% return
Youtube/Google: 44% return
Continue to observe their behavior and you will uncover new stocks to buy.
Strategy 5: Trends and Noise
The more people talk about something, the higher the overall share price of that industry will be in the next few years.
In recent years, AI has been the hottest trend, and companies which is in the AI space like Nvidia, AMD, TSMC have benefited from huge spike in share price compared to 5 years ago.
Let’s go back a few years to look at another example of trends in hindsight.
What do you remember in 2020?
Yes, that’s our worst nightmare as the entire world is hit by COVID.
However, with this trend, pharmaceutical companies such as Pfizer, Moderna etc all benefited. If you got in early in 2020, the returns are exponential. But fast forward 5 years later, those stocks have dropped as the trend has shifted to AI.
Observe the next wave of trends, get in early, and get out early!
Conclusion
Use these 5 strategies in stock investing and this will minimize the risk of investing, while potentially give higher returns than FD.
Caveat: This is not investment advice, please do your own research before investing.
