While the global economy is seemingly heading towards a steady recovery after suffering a massive roadblock in the form of a global pandemic this past year, it’s looking more and more like the rest of us 99-percenters will need some way or form to bolster our finances for the unforeseeable future.
For some, the on/off lockdowns over the previous 15 months have given them the opportunity to look into investing avenues outside the norm — with cryptocurrency (and mayhaps online gaming) being chief among them. For others, stable traditional investments trump the volatility of this new age “stock” option.
That being said, there will certainly be an influx of new investors into the market as the world begins to reopen. Here are some investing tips for newbies.
Invest In Knowledge
The saying goes: “knowledge is power”.In this case, doing research and your own due diligence is paramount in order to make the correct decisions on what to invest in lest you suffer the economic burn. For that very reason, it’s recommended that you only invest in businesses that you know and understand. This personal knowledge is the most important investing weapon that you may utilize in the warzone known as the stock market. Knowing intimately, a company’s products, business cycle, management style, and competitive standing will afford you the perspective to make more timely decisions when it comes to selling.
Dividend is Magic
Ever heard of passive income?
If you could not be bothered to stare at a screen all day long trading stocks, dividend stocks are the way to go. Not only do you receive a payout for simply holding shares, but you’ll also be entitled to join some rather interesting AGMs for the company as well!
Yes, dividend yields do not offer the most lucrative rewards compared to day trading. But on the flip side, even if a stock’s value tanks, the dividend payout still provides the precious opportunity to enjoy a steady income stream as these stocks still make dividend payments regardless of the share price.
The point being, you should maintain a healthy, diversified balance between steady passive income and more volatile options if you plan on investing.
A Diversified Portfolio is A Good Portfolio
Speaking of diversified, it will bode well for your cash flow to have a well-diversified portfolio which could include stocks, bonds, cash, and even cryptocurrency.
After all, you should never ever put all your eggs into one basket — as the saying goes.
Likewise, you may also want to take a look at a myriad of currencies and commodities. And your balanced and diversified portfolio should also be able to perfectly reflect your risk-reward profile.
Furthermore, each of your investment classes may also be further diversified. For instance, index funds are an option to diversify stock exposure across multiple classes including cyclical and defensive classes. As an aside, index funds have historically outperformed similarly cobbled together portfolios by active investors which further justifies its value in a well-rounded investing portfolio.
Lastly, bond funds will certainly help in smoothing out any bumps along the road during volatile periods or downtimes.