Building and understanding your investments portfolio is vital for becoming a successful investor. By investing into the right objects for extended periods of time, you can attain a great return on investment and increase your wealth naturally with minimal efforts. Diversification is key too, you can’t keep all the eggs in a single basket. It’s a good idea to own a couple of diverse, unique investments that generate income in a variety of ways. This is a great portfolio building mentality. Even if one of the investments goes down in value, there’s still others to make up for the loss.
When establishing your investment portfolio, try to focus on safety and the potential to achieve growth in the long run. Stocks and other assets that have high growth can be great drivers to pushing a portfolio’s success. At the same time, cash and bonds are safer instruments that can counteract downturn concerns related to principal safety - the likelihood that, when cashing out, at least the money paid for an investment is returned.
Everyone has different goals: ranging from a wish to purchase an expensive asset to early retirement savings. Before starting out, it’s valuable to reflect over short and long term goals. Creating a portfolio structure that helps you meet the desired investment goals, while also staying within a low risk margin will return the optimal results. Some people will build up the investments using the top to bottom investment strategy, others will go the other way around. Bottom up investing focuses on performance of individual companies, rather than macroeconomic situations.
Every investment should be seen as a part of an entire portfolio: a piece of a puzzle, that might not make sense alone and is meant to be present in conjunction with other instruments. Diversification is especially important during current times, due to the incerainity caused by the Covid-19 pandemic. Proper investment diversification mitigates risks in a time of high volatility by having multiple investments in uncorrelated asset classes.
You can’t know what global issues will appear and how they will affect the economy. What you can do is focus on growing your investment portfolio by holding money in multiple locations and/or asset classes. Once a strategy is created, it can generate wealth in the long run with minimal efforts.
On top of that, you should consider all the current macroeconomic situations. Factors like inflation, unemployment rates, lower buying power can all impact your investment. When investing money in times of high volatility, try to focus on the long term. Profits which are not withdrawn (e.g dividends) can be automatically reinvested, generating therefore more profits than before. In case you invest in a company, study their cash flow, balance sheets and make sure that they have little to no debt.
Absolutely, many of them can pay off and bring you great returns on investment (ROI), sometimes much higher than other traditional instruments, such as gold, gas and oil. Be it fine art or luxury items, these alternative investments have also different trends. For example, Konvi’s investments are uncorrelated to commodities or the stock market, and P2P lending platforms offer investing in loans with much higher returns than through the bank.