Whether or not you’re new at investing, here’s one thing to keep in mind: investment is risky. If it weren’t, everybody would be doing it! You probably hear that all the time because it’s true. Now, you’re probably asking yourself: should I keep investing? Absolutely. It’s the best way to make more money. You just have to make sure that you’re making smart investments to minimize risks and, in turn, minimize losses. Here’s how:
- Diversify your investment portfolio
There are many risks involved when it comes to investment. There is always a chance for investments not to work out. Putting all your money into just one investment leaves more room for you to suffer losses. This is why diversifying your investments is one of the smartest things to do. You should seek to invest in at least two different companies, two different industries, and two different kinds of assets so that if one of them fails, you will still have your other investment.
You will still feel the loss, but the impact won’t be as huge as when you put all your money into just one investment. By diversifying, you will have your other investments to keep you stable. Your goal isn’t to avoid losses because losses are inevitable. However, you can still minimize your losses.
- Look into refinancing a rental property
If you have an investment in a rental property, you might want to think about refinancing. Why? Doing so will help you lower your mortgage rate while increasing your rental income. You get access to equity, which you can use to renovate the property you already invested in. Also, you can purchase even more investments or use the equity to fund your other assets. It’s also a great way to boost your portfolio.
And if you aren’t investing in rental property yet, you should look into it.
- Don’t invest and forget
There is this saying that investors have: “Invest and forget.” Some say it is one of the best investment strategies there is, but you shouldn’t take it literally. As much as people would like to invest and forget that easily, you can’t forget about your investments. It’s quite hard to forget about your investments, especially when they’re volatile.
The main idea behind “invest and forget” is to make investments that are for the long haul. In other words: long-term investments. The reason people have this saying is that one of the advantages of long-term investments is low volatility, which means low risk. That is why some people believe that you can just invest, close your eyes, wait a couple of years, and get your money back. You don’t forget about it. It just gives you better peace of mind because the risks are so low.
Another advantage of long-term investments is that it takes the emotion out of investing. Some find investments thrilling as if they are gambling, but if you want to be a smart investor, you should know that investing is not gambling. The moment investments feel like a gamble, it’s a good sign it might not work out well.
- Invest outside of the stock market
Did you know that more than half of American families have invested in the stock market? Most people would swear that the stock market is your best bet for getting the most out of your investments. Although this is true, you should still consider investing outside of the stock market. Why? As mentioned earlier, you have to diversify your investments. Not only will this help you minimize losses, but it will also give you another place to earn when the stock market is down. The stock market is a highly volatile place, and although it isn’t an issue for some, it can still be quite alarming.
Some popular investment alternatives you can look into are real estate and business ownership. In real estate, one of the best options would be farmland. According to Forbes magazine, for the past 47 years, U.S. farmland has yielded returns of over 10%, and the market opportunity is massive. Business ownership, such as a franchise, is a good investment because it allows you to have a source of daily income, making it very reliable. In the end, you can even choose to sell your business. There are also plenty of other alternatives such as precious metals, mortgages, and art.
In conclusion, investment is risky, but it’s always a good idea. Besides, if you learn to make the right decisions, you can certainly minimize the risks and losses. You just have to be smart with your investments.
Meta title: How to Make Smart Investment Decisions
Meta description: Are you making the right decisions for your investments? Here are a few things you probably didn’t know that could help you make smarter investments.