You probably have heard before that you shouldn’t put all your eggs in one basket. This comes especially true for investing and portfolio management. Portfolio diversification is key for stable returns und profitable long-term investing. But how to invest money? What are smart ways to grow your income on the path to financial freedom? Is it possible to start investing small and grow a fortune long-term?
Here on TodayTrader you can find educational financial content about all kinds of different asset classes and interesting investment opportunities. We cover traditional asset classes like stocks, real estate or precious metals. In addition we also help you understand more recent ways of investing money like P2P lending, robo advisors or high-risk investments like cryptocurrencies.
Asset classes and smart ways to invest money for portfolio diversification
Investing in the stock market has historically paid off with great returns. You can either invest in stocks through investment funds or ETFs for better diversification or do stock picking if you believe that particular companies will outperform the market on the long run.
A mutual fund collects money from many investors to invest in stocks, bonds, forex, real estate or other investments based on the underlying investment strategy. The advantage of mutual funds is higher diversification in comparison to individual investments.
ETFs (exchange-traded funds) are baskets of assets with advantages over mutual funds or individual investments. ETFs are traded as common stock on a stock exchange and you can participate from the performance of particluar markets, indexes or else.
Investing in real estate is one of the oldest forms of investing and it’s one of the basic asset classes that every investor should consider adding to his or her investment portfolio. You can invest in real estate directly or through investment funds, ETFs, REITs and more.
Cryptocurrency like Bitcoin, Ethereum or Litecoin are digital currencies based on decentralized P2P networks (Blockchain). Investing in cryptocurrencies involves significant financial risks, but also the chance that cryptocurrencies will become mainstream.
By investing on peer-to-peer lending platforms you are able to loan money to individuals in small increments as if you were the bank. The interest rates for these loans usually are way above common rates at banks so that you can achieve a good ROI with calculated risks.
Throughout history, civilizations have always believed in the value of precious metals. Gold, silver and other precious metals are great long-term investments and should be part of every larger investment portfolio. You can invest in precious metals directly or indirectly.
Marilyn Monroe already knew that diamonds are a girl’s best friend. Diamonds are alternative investments which are especially interesting in times of a global economy crisis. Diamonds don’t take up much room and have a few advantages over other alternative investments.
Did you know that fine wine is one of the best performing asset classes? While that is true, investing in wine requires solid expertise as this investment also involves significant risks. However, it’s also probably the only investment you can still enjoy when you’ve lost money.
Art can be a great long-term investment if it’s purchased in a smart way. You can invest in art directly, which requires solid expertise and experience in the international art market or you can invest in art indirectly through managed art funds or alternative investments.
In case of this asset class, money indeed grows on trees. Investing in wood / timber can be a great way to further diversify an investment portfolio. You can invest in wood by bying ownership of woodland / forest or invest indirectly through investment funds or REITs.
Venture capital is the lifeblood of new businesses and startups. Investing money in startups involves significant risks, but can also help you achieve an extreme ROI. For average investors a way to invest venture capital in startups is through crowdfunding.
A popular choice for investors who seek low-cost, automated investment opportunities are robo advisors. Robo advisors use computer algorithms to set up a customized, diverse portfolio and wealth management strategy based on your personal financial situation.
Starting your own business can be one of the best decisions in your life. If you have an interesting and solid business idea, investing in your own business idea can pay off way more than other investment opportunities. Your own business can be a way to financial freedom.
Having debt usually is the opposite of financial freedom. If you want a guaranteed return on investment, paying off your debt usually is the best investment decision you can make. Once you’ve paid off your debt, you can start working on your investment portfolio.