What is the main purpose of an investment strategy?

The main purpose of an investment strategy is to outline a plan and set goals for investing. A well-defined investment strategy helps investors identify their financial objectives, understand their risk tolerance, and determine the type of assets that align with their overall financial goals. By having a clear plan, investors can make informed decisions, maintain discipline during market fluctuations, and measure their progress toward achieving their targets.

This approach enables individuals to take a systematic route to building their portfolios rather than making haphazard decisions without a guiding principle. An effective investment strategy considers factors such as time horizon, liquidity needs, and diversification, ultimately leading to more prudent and sustainable investment practices.