Building A Portfolio For Exceptional Growth And Stability
Updated: Mar 29, 2022
The right kind of portfolio is one that has investments across multiple sectors. This is not a new concept. This kind of strategy is one investors use to offset losses as the markets and economies around the world move, but you don’t just want to protect your investments. You want them to see real growth and return. There are things you can do no matter where your portfolio is in its development.
Your assets are anything that you can financially use throughout your life. These are things that can become liquid assets if you need them to be. They can be tangle items such as your father’s classic car or that old edition of David Copperfield that dates to 1898. Your investment portfolio can have these portioned into parts to balance your investments between sectors.
Investing in stocks directly holds more risk because they only can balance itself. When you invest in stocks the idea is to buy it when the market is at a low or when it is a newer company and anticipate its growth over time. This is a watch and wait, sort of investment strategy.
Most of us are too busy with work and family to move money around on a daily basis; so like many investors, they make investments with an eye to have them appreciate over time. If you invested in a growing company in the 1990s that is doing very well in today’s market that means you bought it at a risk then and have been able to enjoy the fruits of a well-grown company that gives back to its shareholders now.
Stocks are a terrific way to grow a portfolio as you directly own a piece of the company, but they also hold some of the greatest risks. If the company enters financial difficulty or the product they are marketing decreases in value over time, the stock will fall and so will your investment.
Bonds are a terrific place to move your money to when the economy is on shaky ground. They will not necessarily give you the high degree of returns you want for your accounts, but they are stable. Having at least some of your funds in bonds makes it easy to move more money into them if the stock market and world economy begin to shift downward.
These securities are a better investment to have your money in should a bear market begin. This is a fixed income investment that should see the company, municipality, and government, or state pay to return your investment to you with interest.
U.S. Treasury Notes
U.S. Treasury Notes are some of the most stable investments you can put your money into. Not only does the government back them up, they are an almost risk-free investment. They have fixed interest rates so if the market economy starts to move, it stays the same and since the government backs it, the only way you can lose this investment is if the government defaults on its own loans. This is one of the best places to have or park money in when the markets are getting rocky.
Real Estate Investing
There are several different ways you can invest in real estate and there are different reasons you will want to. Real estate purchases can be one of the best ways to build wealth and manage your securities.
1. Home: most of us start by buying a property through the purchase of our first home. Like the rest of the market, you hope to buy low and sell high. This means purchasing a more moderate home to begin your home ownership with the intent to upgrade and capitalize later.
This is more complicated than it sounds because you not only want to get your initial investment back when you sell the home but any money you put into the home through basic maintenance and upkeep. The best time to sell your home is at the height of the real estate market. If you own a home in Seattle, the best time to sell your home is right now when you will not just double your investment, but triple it because of the housing shortages.
2. Landlord: Having a second property is a lot of work. It can also mean additional income as you rent the home out to someone at market value. You will need to pay the property taxes and pay for any required maintenance but it is a stable investment you can generally capitalize on.
This does come with its own added set of expenses though in carrying additional insurance for the rental property and there is always a possibility of getting a bad tenant who damages the property or does not pay.
3. Physical Property: A piece of land can be more than a place to build a home or a business. It is an investment opportunity. The same as buying stocks, if you find a piece of property and buy it when the market is down, that purchase can be capitalized later as the plot of land increases in value and the need for city expansion or home building spreads. This is a good way to pick up undeveloped pieces of property for a lesser cost and sell them for a profit later.
4. Trading: There are different ways to buy and trade real estate funds. You can invest directly into the companies that hold properties through purchasing a piece of their company. You can also invest in several through the purchase of mutual funds and EFTs. This is the easiest and most stable way to invest in real estate. It is easier to move securities around when the market is moving than it is to sell a physical piece of property. It is also easier to watch the numbers to know exactly what your investment is worth any day of the week.
Real estate investing has been historically a stable and sound investment. The recession of 2008 showed us the folly of placing too much of our invested income into one security, though it should be part of your portfolio in multiple ways. Real estate does not usually swing the way the market does and like purchasing stock from a new company, you do so with the idea of selling it later once it has appreciated considerably.
The Well Balance Portfolio
Wealth management is more than an investment strategy. It is a way to secure your investments against another depression or recession. It is also a way to build wealth for a financially secure present and future.
Retirement: a 401 (k) and/or an IRA can help secure some of your retirement funds. They can be started by you and the company your work for. These are funds outside of your other investments. They help you during retirement, but should not be the only way you invest your money.
Smart portfolio investing means understanding you cannot make your money overnight. It is a gradual process of building and adding to your existing funds. A diversified portfolio holds money in all of the above sectors and more. Investment opportunities are everywhere and part of the challenge is taking the risk. Spreading your money between sectors and institutions will give you gradual portfolio growth and the hardest part if being patient and letting it grow on its own.