How To Diversify Your Investment Portfolio With Tangible Assets

Putting all of your eggs in one basket is never a good idea. When it comes to investing, the most successful investors are those that have expanded their portfolio beyond one or two investment options. Making a huge profit from one outlet alone isn’t necessarily impossible but that would take a lot of luck and time. 

One tip you’ll commonly hear from the top investors and brokers is that you should diversify your portfolio. This simply means looking at other prospects for investing so that you have more room for growth. Truth be told, it’s not really easy to diversify your portfolio seeing as various markets are currently volatile and that there are various options to choose from. 

If you’re thinking about spreading your capital properly, we’ve got a few tips on how you can do so with minimal risks.

Consider Investing In Various Industries

If you are going to focus on the stock market alone, then you should be smart regarding what industries you invest in. Instead of going all out in a certain field of companies, you should expand it instead by seeking out other industries as well. For example, you can invest 50% of your funds in tech, while you place the remaining in medicine.

This is a smart move because stocks are not just affected by a company’s actions, it’s also affected by industry trends. As per NASDAQ, both Moderna and Pfizer’s stock have a lot of potentials currently. That’s because both are front-runners in the race to mass develop a vaccine for the Covid-19 pandemic.

Since the pandemic began, stocks from companies in the field of medicine have been stable. On the other hand, oil companies continue to struggle because of production woes. There are merits to diversifying your portfolio by industry. It pays to read up on current news if you are thinking of going this route.

Pull Out When Necessary

The thing about diversifying your capital is that it’s versatile especially when it comes to market volatility. If you feel that a downtrend is about to occur in one of your assets, you don’t have to wait for it. Pull out, and then place your money elsewhere. On the other hand, your other assets won’t be affected by any means.

Now, look at it if all of your money is invested in one company. Once a downtrend occurs, you’re already making losses on that asset. Don’t get too greedy when it comes to your assets. Don’t let any downturn affect your money any further and pull out whenever you think it’s necessary.

Pick Index or Bonds Funds

Placing your capital in securities that monitor various indexes is a good plan for long-term diversification. Moreover, adding fixed-income solutions helps protect your portfolio from volatility. Bonds focus on investing in a bond market’s value instead of a certain movement in a specific sector.

What’s even better about these bonds is that they are generally cheap as compared to other stocks. As they are cheap, you have more capital to place on other investment options, or it could just be simply money you can add to your savings account.

Go Beyond Stocks

When hearing the word, “invest” most people immediately think of the stock market. While the stock market is a smart means to grow your money, you should consider going beyond it still. We’re not talking about cryptos as these are high-risk investment options you might not want to get for now. Instead, we are talking about commodities instead.

Commodities like silver and gold are tangible investment assets that you should add to your portfolio. Silver coins and silver bars like the ones that can be found here are great assets to invest in as their prices are generally on an uptrend. While the prices do move down every once in a while, it’s still more stable as compared to other investment options out there.

As per Motley Fool, the prices of commodities fluctuate wildly depending on supply and demand. For this reason, this makes reading the future prices of commodities much easier. You see, companies can make decisions that affect their stock value. On the other hand, commodities all rely on whether or not people are looking for that certain raw material.

Another reason why commodities are a good asset to own is that they move rather differently as compared to stocks during inflation. While stocks tend to plummet during inflation, commodity prices will move upwards. As you would with the stock market, it would be best to brush up on the current news before investing in commodities.

You need to keep in mind that there will always be a demand for certain commodities. These commodities include silver, gold, oil, and several others. As there’s always a demand for them, it’s nearly impossible for the commodity to completely die down. Even if there’s a downtrend, an increase in demand will lift the commodity immediately.

Seek Out A Broker

Brokers are professional people in the field of finance. What they do is help you find the investment options for a fee. In essence, you can think of them as the middleman between you and the stock market. Hiring a broker might be the best option on your end if you are still a novice with regard to seeking out investment options with high potential.

A broker will do all the work for you. What’s better is that they’ll adjust your portfolio depending on your preferences. They’ll ask just how much you’re willing to invest and what your future goals are. As they are more knowledgeable when it comes to the stock market and investing, there’s less risk when having them help you out.

Diversifying your portfolio might be one of the wisest things you can do to grow your wealth. The key is to ensure that you won’t be losing all of your capital once things go awry. Keep in mind that by growing your portfolio, you also maximize your room for growing your capital tremendously. Of course, it pays to be smart regarding how you spread your cash.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.