1st January 2016
TRIED AND TESTED INVESTMENT STRATEGIES — CREATE A BALANCED PORTFOLIO
Creating real wealth requires you to invest your money intelligently. Whether you are a new investor or a seasoned professional, there is a range of investment possibilities that can help you to earn significant returns on your investment.
Investors of all ability levels are aggressively seeking investment tips and speculative ideas. Those who are inherently afraid of taking risks or have almost no tolerance for losing money, tend to stick to low risk/low return options like bonds, real estate, and precious metals, while those who desire greater returns and have a slightly higher tolerance for risk tend to play within the securities market or currency arena. In this article, we will focus on four markets to consider as part of your investment strategy.
When it comes to any intelligent investment strategy, you’ll never want to put all your working capital into one investment idea. Rather, create a balanced portfolio by incorporating a variety of investment options. Everyone should own some stocks, bonds are great to balance out the long-term piece of the portfolio, and real estate has proven to be a reliable long-term investment opportunity. Currency swaps can provide incredible gains with a minimal upfront investment, and precious metals have proven to be a reliable hedge against market volatility. Let’s take a closer look at these options:
The stock market – Despite having a slow start, some experts are hopeful that by the end of 2019, there will be rock-solid gains for stocks. It is predicted that the S&P 500 may even advance from 5% to 15% which makes the stock market a good option for investing despite the fears of a recession. However, other experts are advising investors to be cautious because of potential upheaval in world trade due to global political and economic circumstances and to have solid risk management strategies in place.
The verdict: Keep an eye on international news and interest rates, and make sure you have a realistic risk management strategy in place. Stocks should always exist within your investment portfolio, but you must be prepared for significant valuation swings and brace yourself for any setback for the rest of 2019.
Real estate – With the exception of certain time periods throughout the last hundred years, real estate has proven to be a reliable and lucrative investment option for most individuals. Some real estate investors decide to purchase residential or commercial properties and then renovate them to create more saleable real estate holdings, while others purchase real estate and then convert the locations into rental properties. Other investors decide to put their money into REITs, or real estate investment trusts. Shares of REITs can be purchased in a similar manner to purchasing shares in a mutual fund, which enables even small investors to participate in the real estate investment trust with just the click of a button.
Investing in real estate remains a viable option for today’s trader. In general, real estate has low liquidity and a favourable risk/reward profile. There are a number of factors to consider when investing in real estate; this includes the type of property and your purpose for investing. The housing market varies from country to country, so it’s best to read up as much as possible on the real estate market in your country of interest before investing.
The verdict: Real estate positions should be a part of any diverse investment portfolio. The average investor today should designate a certain percentage of his or her investment capital to real estate investing – with an eye towards building wealth through long-term real estate holdings.
Precious metals – As a benchmark for investors throughout the ages, precious metals have been sought after as a naturally-occurring investment option for centuries. After all, precious metals are of finite supply, which means that they inherently have real value. Think about it this way: a gold coin in the 1920s would have had enough value to purchase a custom-tailored men’s suit at the time. That same gold coin today would still be able to pay for a similar men’s suit, which demonstrates that the value of precious metals moves in a predictable manner throughout the years. Twenty pounds in 1920 would have bought a very nice suit, yet it wouldn’t even cover the cost of a silk tie in today’s valuation.
The verdict: So, the real question is, do gold or other precious metals represent a smart investment move for today’s trader? With increased global market instability, the price of gold will likely see an increase in the upcoming year as gold is often used as a hedge against overall market volatility. Due to the inherently conservative returns that are the hallmark of precious metal investing, smart investors will not want to dedicate a large share of their investment portfolios to precious metals. However, if you are interested in investing or trading in gold, then it’s highly recommended that you read up on the market and the factors that influence its value before risking capital.
Currency market – Investors who seek an opportunity to quickly and efficiently reap significant gains often turn to the currency marketplace, or Forex, to do so. Forex traders play the valuation of two paired currencies off against each other to net a profit. Historically, this investment avenue has delivered greater profit margins among those who understand the fundamentals of concentrating. Forex demands more of the trader, as having an informed and educated trading philosophy is absolutely crucial to making money in the currency marketplace.
The verdict: For those who understand how to identify and react to global news events and information releases, the Forex market place offers great investment opportunities for traders. It is important that traders who are looking to invest in currency markets keep up to date with the latest market news.
Savvy investors will continue to create balanced and diverse portfolios that temper risk and reward. An investment portfolio should contain stocks and bonds, precious metals, real estate holdings, and working capital dedicated to currency trading. This balanced approach will help any investor to react appropriately to whatever the rest of 2019 delivers.
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