Popular Investment Options For Those New To Diversifying Their Portfolio
When you are looking to invest to try to diversify the portfolio you have, or to expand it, it seems simple at a glance. Stocks and bonds.
That’s it, right? Well, no, and aside from looking at different types of stocks and bonds (common stocks, mutual funds, etc), there are other areas to explore that can help you to keep your investment options and protect your nest egg.
So, while rushing up on the options that are familiar, here, you will also be guided through different investment types to help you expand your confidence and potentially your portfolio.
Why Invest?
If you are reading this as a newcomer to the world of investing, you may already have ideas like “isn’t investing in anything risky? Why should I invest at all?”
Investing enables people to grow their wealth over time, protect their purchasing options against inflation, and work towards long-term financial goals. For many, the aim of investing is to help them save for retirement or to save for a loved one's education. Rather than saving, investing makes your money work for you, and this can create an income stream via growth or asset appreciation.
It can also help you to participate in things such as supporting businesses and infrastructure. Of course, investing does come with its own share of risks, but a long-term approach and a well-diversified portfolio can help you manage economic uncertainty.
Investment Options for Diversification
So, if you want to grow your investment portfolio, what are the options you can look into?
Cryptocurrency
Introduced in 2009, cryptocurrency is one of the newer types of investment that made headlines as an option for people to have their investments earn them higher growth potential in a shorter time. Of course, like most investments, placing money into them with this aim is not a good idea, and potential investors in this area should be sure that they are familiar with the terminology of this area, as well as how to invest. Check out the website CoinEx Onchain for insight into crypto markets before investing. Many people are familiar with Bitcoin and Ethereum, but due to the cryptocurrency market being comparatively volatile compared to other investment types, the prices can change rapidly. So, if you are new to this area of investment, it is wise to only place a small amount of money into this type of investment. When used wisely and when familiar with the lingo, cryptocurrency can be an area for growth, even in the long term.
Stocks (Equities)
Most people have heard of stocks or equities, which represent ownership in publicly traded companies, and they are a cornerstone of the large majority of investment portfolios. They provide long-term growth, especially when they are held for many years. Investors can easily diversify their portfolio with equities by investing across different sectors, companies of various sizes, and even taking it global with investments in different geographic regions.
Stocks can be volatile in the short term, but history has shown that they often outperform many other asset classes. Dividend-paying stocks can also provide you with an income alongside the growth and appreciation of your longer-term holdings, making it an income-oriented and growth-focused investment.
Bonds (Fixed Income)
Many people assume that stocks and bonds are the same thing, but they are not. Bonds are debt instruments that are issued by governments, municipalities, and corporations, and they typically provide interest payments and return the principal at maturity. They are considered lower risk than stocks, which can make them a stabilizing force when you are looking to diversify your portfolio.
Including bonds will help you to offset market downturns, as bonds often move separately in value from stocks, and you can further diversify by choosing different bond types. These include government bonds for safety or corporate bonds for higher yields.
Real Estate
Real estate allows investors diversification via tangible assets that are often separate from many financial markets. People who are looking to diversify can gain exposure through direct property ownership or through real estate investment trusts.
So, you can get a steady income via renting or the long-term appreciation of the property, with inflation protection.
Commodities
A posh term for items, commodities include physical assets such as gold, silver, oil, and even agricultural products. The assets are often used as buffers against inflation and currency risk, which is why many TV shows depict wealthier people having bars of gold in a wall safe!
Best of all, commodities do not track alongside stocks and bonds, making their value more stable over longer periods, which can make them a solid cornerstone of a diverse investment option.
