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Developing an investment strategy with shares



Below is an easy to follow process to help you develop your investment strategy. Creating a clear strategy can give you direction and help to achieve your investment goals quicker.

  • Establish your objectives
  • Determine a timeframe
  • Allocate asset classes
  • Set investment parameters
  • Create a risk management plan
  • Inform your decisions

Establish your objectives

As with any strategy it is important to establish clear and achievable objectives from the beginning. Make sure to consider what your appetite for risk is and implement it into your objectives. Investment objectives should be based around factors such as targeted income, capital growth and returns.

Determine a timeframe

A timeframe should be created for achieving your financial objectives. The level of risk you are willing to accept is useful for determining the length of your timeframe. Investors with longer timeframes can generally accept greater risk as they have the capacity to bounce back from short-term market fluctuations. Whereas an investor with a shorter timeframe, may need to exercise greater caution in their security selection.

Diversification and asset allocation

Diversifying across a range of securities, industry sectors and asset classes may help reduce the volatility of investment returns.  Your asset allocation will be dependent upon the nature of your investment objectives and timeframe. Strategies seeking higher returns over a short timeframe may be skewed heavily towards a particular asset class or industry sector, which may also result in increased volatility of returns. Whereas a more diversified asset allocation may have less volatility.

Asset allocations should not be viewed with a ‘set and forget’ mentality. Changes in economic forecasts, interest rates and regulation, amongst many other factors, may impact on the ability to achieve your objectives.  It is important to regularly review the weightings of your portfolio to ensure they are appropriate for your investment strategy.

Set investment parameters

Setting investment parameters means deciding upon what you will and what you will not invest in. Having a well-defined approach will allow you to focus on opportunities best suited to your investment objectives. These parameters may involve only investing in blue chip companies or energy stocks. Again, you should look to reconsider these parameters over time as you refine your strategy.

Create a risk management plan

A risk management plan should be implemented across all stages of your investment strategy. You need to identify which risks you are susceptible to and develop a plan to mitigate those risks if need be. It is one thing to have a risk management plan and another thing to stick to it. Refer to our Risk and volatility management page for more info.

Inform your decisions

As an investor you have access to countless resources, tools and information regarding investment opportunities. Your decisions should be guided by an informed understanding and if you do not feel confident in your decision you can always seek professional advice. Below is a list of a few resources available:

  • Economic research
  • Financial planners or advisers
  • Market and industry research
  • Company and stock market analysis
  • Watchlists and alerts



Important information

The information on this website has been prepared without taking account of your objectives, financial situation or needs. Because of this, you should consider its appropriateness, having regard to your objectives, financial situation and needs and, if necessary, seek appropriate professional advice. If a Product Disclosure Statement is available in relation to a particular financial product, you should obtain and consider that Product Disclosure Statement before making any decisions about whether to acquire the financial product.

The information contained on this website does not constitute the provision of advice or constitute or form part of any offer, solicitation or invitation to subscribe for or purchase any securities or other financial product nor shall it form part of it or form the basis of or be relied upon in connection with any contract or commitment whatsoever. Any securities or prices used in the examples on this website are for illustrative purposes only and should not be considered as a recommendation to buy, sell or hold. Past performance is not a reliable indicator of future performance. This website may contain material provided directly by third parties. This information is given in good faith and has been derived from sources believed to be accurate at its issue date. While such material is published with necessary permission, no company in the Westpac Group nor any of their related entities, employees or directors (together, "Westpac"), nor the Participant, accepts responsibility for the accuracy or completeness of, or endorses any such material. This website may also contain links to external websites. Westpac and the Participant do not accept responsibility for, or endorse the content of, such external websites. Except where contrary to law, Westpac and the Participant intend by this notice to exclude liability for material provided directly by third parties and the content of external websites.