Expanding Your Investment Options on a Tight Budget
Achieving financial wellness requires careful planning and disciplined money management. Speaking from personal experience, I didn’t always prioritize investing, saving, or diversifying my financial portfolio. Over time, we’ve seen the ups and downs of the financial markets. Fortunately, dedicated investors have enjoyed great returns from Wall Street since 2009. For the past six years, Wall Street Bulls have moved upward, benefiting many financial portfolios.
I have to admit, I jumped on this trend a bit late. By the time I started investing, tech giants like Facebook, Google, Twitter, Tesla, and Microsoft were already soaring. Still, I believe the upward trend will continue, and my portfolio will eventually improve. My past experiences have taught me that the smartest financial portfolios are those that minimize market risks over time. This can be achieved by practicing dollar/cost averaging, which is one of the best ways to invest in financial markets.
DON’T FEAR INVESTMENT
Instead of dropping a large sum into mutual funds, single stocks, ETFs, or 401(k) investments every few months, it’s better to invest smaller amounts monthly. This strategy provides a more balanced spread when purchasing equities. For example, as of June 1, 2017, Apple saw a 39% increase for the year, Facebook rose by 33.52%, and Google went up by 26.40%. If I had invested in Google three years ago, my returns would be 77.08%, Facebook would yield 137.98%, and Apple would be 70.08%. Such incredible growth could significantly enhance your portfolio, especially if you start investing early in your career.
You might wonder what I did with my money all that time; well, it sat in zero-interest bank accounts. Can you believe I actually paid fees to keep my money there? A common reason people hesitate to invest in financial markets is the fear of market volatility. They worry about losing their entire savings during a market downturn. Although this is a possibility, consider the financial crisis that wiped out trillions from Chinese markets when the Shanghai and Shenzhen composite indexes crashed in 2015/2016. Chinese GDP fell from over 7% to 6.7% as commodity demand plummeted. However, China’s stock markets have since bounced back, and today, it boasts the world’s second-largest economy with substantial gains. This shows the resilience of financial markets. Even in a downturn, profitable investment opportunities exist, which are usually better than leaving money in a bank account.
SHIELD YOUR INVESTMENTS THROUGH DIVERSIFIED PORTFOLIOS
Hedging is a great way to protect your investments when certain market sectors face challenges. Gold is often viewed as a safe haven during uncertain times, as investors move away from equities to gold. This holds true for the Japanese Yen, oil, and Treasuries as well.
A useful tip from a top options trading broker was to distribute investments across domestic stocks, foreign stocks, bonds, mutual funds, ETFs, and currencies. You might also consider diversifying further with contrarian trading options, like CFDs and other derivative trades. However, it’s crucial to manage your expectations for quick returns on these investments.
THINGS TO PONDER BEFORE INVESTING
If you’re not diving into futures markets, which involve leverage, margin, and high-risk, patience is key as you wait for your assets to grow over time. While keeping cash in the bank can act as a cushion against stock market volatility, it won’t perform well during periods of hyperinflation and low-interest rates. A balanced portfolio is still the best option for planning your retirement. Remember the golden rule: Don’t put all your eggs in one basket. A well-considered mix of asset classes—such as indices, currencies, commodities, treasuries, and stocks—can be the safest approach today.