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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. For the last couple of weeks we’ve been diving deep into investing to talk over what you need to know about getting started, choosing your own investments and building wealth over time.
This week’s episode explores different investing strategies, such as day trading and buy and hold, and how each may affect your portfolio. This episode also explores some recent investing trends, such as sustainable investing and investing in cryptocurrencies.
At the end of each episode we leave you with some nerdy homework so you can uplevel your investing game.
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Day trading — where you buy an investment and sell it shortly thereafter — may seem exciting, but this strategy doesn’t always end up making its practitioners wealthy.
Buy and hold, or the practice of buying investments and holding them over a long period of time, is much more likely to help you build wealth over many years. Buy and hold is also far less risky than day trading, which hinges on predicting the stock market. And since even the professionals cannot predict the market consistently enough to make a profit, day trading may not be the best bet for your retirement savings.
Two emergent investing trends are sustainable investing and cryptocurrency. Sustainable investing goes by many names — such as SRI and ESG investing — but the general principle is the same: Use your investment dollars to promote good in the world. Whether that’s investing in companies that don’t rely on fossil fuels or those that have strong diversity and inclusion policies, sustainable investing can help the world around you while growing your money.
Cryptocurrency is a trend that should be approached with caution. While some have made fortunes with the emergence of digital money, others have lost their life savings. Crypto comes with a lot of risk, but in small portions it could be an interesting addition to your portfolio.
Think about what kind of strategy you’d like to implement within your portfolio. Are you going to be buying and selling stocks on the regular, or would you prefer to take the buy and hold strategy?
Think about investing philosophies such as sustainable investing or alternative investments like cryptocurrency. Where might these principles fit in your investing practice?
Put it all together! You’ve learned so much about investing and now it’s time to get started.
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