A diversified investment portfolio is a must for any serious investor looking to boost returns over the long term. Diversification and rebalancing are core features in a robust investment profile built for great returns and excellent stability. With a diversified portfolio, investors can rest assured that any downturn in the market will be short lived and that any dip only affects certain components of the overall whole.
1. Bond Funds and Aggressive Rebalancing
Bond funds offer a nice trickle of dividend income to their owners, but their real strength is in the inverse relationship that they maintain with the stock prices of other individual companies and index funds more broadly. Generally speaking, when share prices drop in the market—say, as a result of government activity that threatens mega-corporations in the tech world, as the current administration is jockeying toward—the bond price point increases. This means that while your portfolio is suffering at the hands of government inquiry in the short term, your bond holdings will float up to new heights.
Many investors include these types of funds and employ aggressive rebalancing tactics to sell off their bond assets when the prices spike and then slowly buy more shares as the normalization of market conditions bring their stock back down. There are, however, many other ways to diversify a portfolio in order to hedge against market uncertainty.
2. The Property Market and Dual-Threat Profits
Real estate is another excellent asset class for those looking to branch out in the marketplace with the help of lenders and personal loan options. Real estate often holds its rigid price structure, even in the most uncertain of conditions, and with a variety of lender options associated with the real estate market—bridge loans, private equity loans, second mortgages, and many others—taking great profits without extending all of your capital is a winner for many. There are few drawbacks with this contingency asset that can help maintain cash flow, and the pros are often massively lucrative for those seeking a new financial product in the form of a traditional loan or other new mortgage option to get into the property space.
Real estate requires a great credit score to lock in eligibility for competitive rates on long-term financing, but the leverage provided by the loan amount to investors who have built up significant holdings in the real estate space is often second to none. It’s no wonder why so many high net worth investors trust their property holdings for great returns over many years.
With a bridge loan in your back pocket, getting into the property space as a landlord looking to bring in monthly rental income or a house flipper seeking to take in one-off profits on each trade can be simplified and streamlined. The real estate space is lucrative and booming.
In addition to slow movers that lock in great stability, a mobile asset class like cryptocurrencies offers an investor the other side of the coin. Younger investors in particular will benefit the most from these types of risk-infused asset options. With a longer timeline, risk should be maintained at a higher level in order to lock in the benefits of high-growth opportunities.
Crypto assets provide this as well as a nonstop trading space in which investing can take place at all hours of the day. Cryptocurrency exchanges operate with low trading fees and excellent margins for those with a robust strategy for growth. Along with stock market assets, cryptocurrencies trade within the scope of technical indicators and price modeling as well. This means that building a strategy for long term wealth generation is possible without the need to engage in unstructured “gambling” on the open market.
Diversifying your portfolio is all about background knowledge and taking advantage of the constant movement of the marketplace itself. There will always be a great new opportunity available to the savvy investor. Take advantage of the current research and keep your ear to the ground in order to find the next big thing in investing.