No matter what you do, investing is a part of everyone’s life. Everyone should take some time to look at their portfolio and see how it stacks up today. If you’re not actively managing your own money, this can be very easy to skip – but that will hurt you in the long run.
Here are 5 investment ideas to look at:
1) Check Fees
Many retail investors think they have low fees because their fund is slightly under 1%. But if your fee includes a load (a commission), which many funds do, then check again – it could be 1 or 2% before tax. It may not seem like a big deal on an annualized basis, but over 40 years, this adds up to one-third of what you originally put in.
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2) Mutual Funds and ETFs
In a low-interest-rate environment, it can be hard to find higher-yielding investments. While not for everyone, mutual funds and ETFs give professional management that might add an extra few percent yields without taking much more risk. Add in the fact that many commission-free ETF’s invest in exactly the same index as a similar mutual fund, but at a fraction of the cost; this is a no-brainer option for most people.
3) High Dividend Stocks
If your earnings are going up 10% or more per year, then buying high dividend stocks could make sense for you. Yields over 3% are a good place to start looking. The downside is that a lot of these ‘high yield’ stocks are not very safe – though there are plenty of solid choices out there, as well as strategies to lower your risk if you want those extra returns.
4) Look At Your 401k
If you have a 401(k), it’s important to look at the asset allocation between stocks and bonds. In a simple portfolio, you should be getting something close to 50/50. If it’s skewed more towards stocks, then perhaps try shifting some assets into bonds over time while keeping an eye on overall performance. Just because your fund is rock bottom priced compared to Vanguard or Fidelity doesn’t mean the average stock/bond ratio is where it should be.
5) Mutual Funds
If you’re looking to retire soon with a full 10+ years until you can access your money, then mutual funds are probably the way to go for you. The long-term average return of 8% is hard to beat, though don’t expect that every year. But remember, averages are just averages – most people’s 401(k)s have an asset allocation somewhere between 40/60 and 80/20 stocks vs. bonds, depending on the age distribution. If you are willing to look at individual stocks or ETFs, there is no reason not to be heavily weighted in one direction if that’s what you feel comfortable with. Sometimes 100% of your portfolio in cash works too!
Bonus Tip: Real Estate
Investing in real estate is a golden oldie. You can also consider buying a plot, building a house, and selling it for a profit while it is still under construction. The 3D architectural visualisation will give the buyers an idea of what the finished structure would look like.
Conclusion
All investments come with some degree of risk, and in an ever-changing market, it is important to keep up to date. By taking a look at your portfolio and trying out some new strategies, you can help guarantee that you’re not leaving money on the table.
Photo by Towfiqu barbhuiya
