The Most Common Investing Strategies Explained

Investing can be anything you want it to be — simple, hands-off, analytical, income-focused, or growth-driven. But regardless of how you approach it, your decisions will naturally place you into one or more of the well-established investing strategies.

I started as a dividend investor, evolved into dividend growth, and eventually landed on a hybrid approach. There is no “right” or “wrong” strategy. Each one simply produces different outcomes, different experiences, and different expectations.

Take a moment to familiarize yourself with the major investment strategies. Understanding the differences will help you choose the approach that best matches your personality, goals, and comfort with volatility.

Index investing is one of the simplest and most effective ways to build long-term wealth. Instead of picking individual winners, you buy ETFs that track entire markets such as the S&P 500, the TSX, or global equity indexes. These ETFs hold hundreds or thousands of companies, giving you instant diversification and reducing the likelihood of costly mistakes.

Index investing is also extremely cost-efficient. ETFs have low fees, and more of your money stays invested and compounds over time. This strategy avoids emotional traps like market timing — you simply own the market and let it grow. Examples include VFV, VOO, SPY, XIC.

All-in-one ETFs combine global stocks, bonds, and automatic rebalancing inside a single ticker. It’s an immediate blend of asset allocation and diversification at your finger tips . Examples include VEQT, VGRO, VBAL, XEQT, ZEQT.

Most professional fund managers fail to beat the market.
Over 15 years, more than 90% of active funds underperform the index they’re trying to beat. Index investing lets you be the market instead of trying to beat it.

Dividend investing focuses on companies that pay regular, growing dividends. These businesses tend to be stable, profitable, and predictable. The kinds of companies that can smooth out volatility and provide a long-term compounding advantage. Reinvested dividends can fuel meaningful wealth creation over time, especially when payouts rise consistently.

Investors choose dividend strategies for the reliability of cash flow, the defensive nature of the companies involved, and the powerful compounding effect created by reinvesting dividends through every market cycle for compound growth. Examples include FTS, RY, TD, SLF.

DGI focuses on companies with 10%+ annual dividend growth, supported by rising earnings and disciplined capital allocation. Examples (10%+ Dividend CAGR) include ATD, TIH, CNR in Canada or LOW, V, MSFT in the US.

Beat the TSX (BTSX) is a simple, rules-based dividend strategy tailored for the Canadian market. Each year on January 1st, you:

High yield often signals temporary undervaluation. With BTSX, you benefit from elevated income and potential price recovery when valuations normalize.

Because the TSX 60 is dominated by banks, pipelines, telecoms, and utilities, BTSX remains a stable, income-oriented strategy with a long history of strong performance.

The core idea is: High yield = undervaluation → higher income + upside.

Dividend-paying companies tend to fall less during market corrections.
Cash flow stability forces stronger discipline, making them more resilient than non-dividend payers.

Growth investing is a forward-looking strategy focused on companies capable of growing earnings, cash flow, and intrinsic value at above-average rates for many years.

True growth companies share three traits:

✅ Strong Growth: Revenue growing 20%+ per year, or clear multi-year acceleration.

✅ Defensible Moat: Competitive strengths like network effects, switching costs, brand dominance, or proprietary tech.

✅ Scalable Economics: Margins expand as revenue grows, allowing profits to compound at increasing rates.

Many leading growth companies operate in markets that barely existed 10 years ago — cloud computing, AI, cybersecurity, digital payments. Examples include SHOP, TOI, WELL in Canada, and AAPL, AMZN, NVDA, META, TSLA in the US.

All compounders are growth stocks — but not all growth stocks are compounders.

Value investing is about buying good companies when they are temporarily out of favour. Instead of chasing what’s popular, value investors look for strong businesses that the market has overlooked, misunderstood, or simply gotten pessimistic about.

A value stock is not a “cheap” company, it’s a quality company trading at a discount.

These discounts happen all the time because the stock market reacts emotionally. A company might fall in price because:

Value investors take advantage of these moments. They buy strong, durable companies when the rest of the market isn’t paying attention.

Some of the most successful investors in history used value investing: Warren Buffett, Benjamin Graham, Charlie Munger, Peter Lynch

Income investing focuses on generating steady cash flow using equity-based income sources such as high-yield stocks, REITs, and covered-call ETFs. It plays a significant role in avoiding the risk of running out of money because the portfolio earns ongoing income that can be used to cover bills and living expenses, reducing the need to sell shares during market downturns.

Covered-call ETFs own a basket of stocks and generate extra income by selling call options on those stocks. Option premiums boost distributions, resulting in very high yields. The trade-off: limited upside because part of future growth is sold for income. Examples include ZWB, ZWU, JEPI.

Some covered-call ETFs go one step further by using leverage or option overlays to push yields even higher. These “Max Yield” or “Enhanced Yield” ETFs generate more income by increasing exposure to the underlying stocks or by writing call options on a larger portion of the portfolio. While the payout is higher, so is the risk: more leverage means more volatility, bigger drawdowns in market downturns, and even more limited long-term growth. These ETFs are designed for pure income optimization, not capital appreciation.

Investors who receive steady portfolio income tend to feel less anxious during market volatility. When your bills are covered by dividends, distributions, or REIT income, day-to-day price swings matter far less.

REITs own income-producing properties such as apartments, warehouses, industrial buildings, and retail plazas. They must distribute most of their income, making them naturally high-yield. REITs give investors real estate income without property management. Examples include REI.UN, CAR.UN, GRT.UN, O, PLD.

REITs are legally required to pay out most of their income to investors.
That’s why REITs naturally have higher yields than regular stocks — by design, not by accident.

Day trading focuses on short-term price movements within the same trading day. It requires discipline, technical skill, and a high risk tolerance.

Day trading focuses on short-term price movements within the same trading day. It requires discipline, technical skill, and a high risk tolerance.

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