Creating a diversified portfolio can help you insulate yourself against risk and grow your wealth quicker. With more investments, the idea is that you will lower the risk of losing all your money. When the stock market is stronger, having stocks is a good thing and when the bond market is stronger, having bonds generate higher profits.
It can be easy to get into a rut with your investments since you tend to stick with what works. Having only stocks and bonds is not diversification. However, it is important that you research other options and talk to your financial planner about some other possibilities.
See Also – 4 Ways to Invest $100 or less
Start by checking how many different types of investments you have right now. The best practice is to always diversify, that reduces the risk of losing all your investment while, steadies up your return. Only having stocks as an investment is risky, similarly only having CDs as an investment is actually a losing proposition as you are missing out on higher returns elsewhere.
Here are a few investing options you might want to consider adding to your portfolio:
All investments are speculative by nature. You are essentially making a bet about whether a commodity will go up or down in value. With binary options, you are speculating about the value of a commodity within a set time frame.
Binary options are a little riskier than some other investing options, but they also offer greater potential for higher yields. You take big risks to make big gains.
Index funds are safer options for those who don’t have as much money to invest. If a loss would wipe out everything that you have to put into investments, you’ll need to consider safer options like index funds.
Index funds are a collection of stocks or other commodities. They include a mix of high-risk and low-risk stocks typically.
Index funds are a great option for beginners since they take the guesswork out of investing, but they can also be used by seasoned investors to create slow and steady profits.
Target Date Funds
Target date funds are mutual funds, but they are chosen based on the number of years you have remained until retirement (or until anticipated retirement, anyway).
Target date funds are a popular choice because you do not have to actively manage them. Like index funds, they help you to create slow and steady profits.
A lot of people think strictly of what they can trade on the stock market when they consider their investing options. But one of the best investments is and always has been real estate.
There are a lot of variables that determine what makes a good real estate investment, so you will want to take your time and do your research before you jump into any purchase. You’ll also need to consider whether you want to buy and flip properties or if you want to purchase them to turn into rentals.
There are many, many more investment options available. Rather than telling you all the choices you should make, it is better to help you understand how to make the choices yourself.
There are some best practices for investing, there are some strategies out there to pick from, here are some investment strategies that every new investor should follow.
Identify Clear Goals
“Make more money” is not a clear goal. “Double my investment” in three months is a clear goal. So is “have $1 million saved for retirement” or “have enough to pay for my child’s college tuition.”
Without a clear investment goal, you can’t know whether you are making the right choices for your portfolio.
Meet with a Financial Planner
A financial planner is trained to know the investment vehicles available and to give you feedback about the best options to meet your goals. A financial planner will not only help you understand your options but also help you define your financial goals.
Do your research and find a planner whose expertise matches your goals. For example, you would not want to meet with a planner who specializes in helping wealthy clients if you have only a modest budget.
If you are unsure about having a financial planner, just talk to a free planner and see how it goes. You’ll need to register with PersonalCapital, a free to use finance app, and link your investment accounts. If your linked investment is more than $25,000 of worth, they’ll assign a free financial advisor, with whom you can have two calls for free.
Once you have those two calls, you sit back and think if the sessions were helpful. if they were, then you can even let the advisor manage funds for you for a very nominal rate. It’s like having your investments managed by an expert, like what billionaires do.
Take Small Steps
There’s no hurry. Take small steps so that you can try out new investment strategies and really get a feel for how they are working out for you.
Try out one new investment type at a time, and really spend time researching the strategy before you jump in. If it goes well, you can spend more or try riskier or more advanced strategies.
If you’re ready, you can then move on to trying another investment type. Just make sure you work with your planner every step of the way to get clear guidance on how to proceed.
The best way to move forward with any investing strategy is to just get started. Make it a habit of putting aside money for your investments, and start building momentum that will grow your portfolio. You’ll gain confidence with your experience, and you’ll soon have the knowledge to take bigger risks and expand your portfolio.
Work closely with your financial adviser to learn about new investing options, and you’ll soon have a healthy portfolio that will earn you big returns.
Readers, share what you know, tell us your story. We encourage you to comment on your strategies, what went all, what went wrong.