The golden rule of investing is to diversify your portfolio as much as possible. Pooling all your money into one venture, no matter how great the returns are, is an amateur mistake. Diversifying investments protects you against market volatility. If one of your investments fail for some reason, you should have other ventures to depend on for income and minimize financial loss. Read ahead to find our several excellent ways to diversify your investment portfolio.
1. Secured Real Estate
As far as high yield investments go, real estate has always been on top of the list. However, after the horrible recession of 2008, many people lost interest in real estate. Since the great disaster, some financial firms have come forward offering secured real estate investment options. By secured, these firms claim that they carefully monitor applicants, review deeds and assess risk in a sober manner. As real estate remains a relevant investment option, might as well go with the secured option.
Gold never goes out of style as an investment option. Gold is a great buffer against economic downturns like the ‘08 recession. The value of gold is calculated inversely against the value of the US dollar. For example, if the dollar goes up, gold value goes down. But when the dollar comes down, as it did in the years following the recession, the value of gold goes up. Therefore, gold is an excellent option to protect your money against economic downturns and inflation.
3. Start Ups
You can, and probably should, invest directly in a promising startup in addition to other, less risk involving options. Startups are not limited to tech companies looking to be the next Google or Apple. There are many ambitious small companies looking to change the game in retail, alternative energy, education and even movies, which are all good markets to invest in. However, investing in a startup will require more on your part. You should be able to soberly assess the goals of a startup, their products and their competency to achieve these goals. Don’t expect too much and only seek to invest in startups that offer unique products.
4. Fixed Deposits
This is one of the safest and low risk forms of investing, albeit a form that generates little returns compared to investing in a market. With a fixed deposit, you will entrust a certain amount of cash to a bank at a fixed interest rate. You only need to fill out the forms and after that, no work is required on your part. Your money will go up in value and when the deposit reaches its expiry date, you can either cash in or renew for another round. When you invest in volatile markets, you must diversify your portfolio with safe investing options such as this to minimize risk.
5. Science Research
Many investors want their money in traditional ventures like the stock market or real estate. Few look beyond toward promising industries such as science research. Studies in pharmaceuticals, energy and technology determine our products for the future. So, think beyond the conventional and diversify your portfolio with unique forms of investing options.
If you don’t diversify your portfolio, you are making yourself vulnerable to financial loss. So, think carefully about the above options and include one or two to your portfolio.