Your investment strategy needs to change over time, and carefully tuning your portfolio to match your place in life can help you meet your overall financial goals. There is no single investmentplan that will work for everyone, but there are specific guidelines you can follow to improve your chances of meeting your financial goals. A combination of stocks, mutual funds or bonds and alternative investments like investment properties can help nearly anyone reach their investmentgoals.
To start investing intelligently, you’ll want to find the assets that are best suited to help you reach your current investment goals.
If you want to earn money quickly, you should look into the riskiest investment options that are available. These are speculative investments that do not have a proven track record of long-term growth, according to Wells Fargo. These types of investments include young and small companies as well as certain types of commodities, such as metals and gems. When you investin this type of asset, you are essentially placing a bet.
Speculative investments are highly volatile, which is part of their appeal. You could double the money you invest in a speculative stock overnight, but you might also wake up to discover that you’ve lost your entire investment because the company went under.
For investors who want to build wealth over the mid-term to save up for a child’s college education or other expenses that are a few years away, large-cap stocks from established companies can be a good option. These are the types of stocks that generally provide consistent performance, and they may even pay an annual dividend. These stocks are less prone to the rapid fluctuations that define speculative investments, but they can still provide strong gains that beat some more conservative options.
This type of investing is not without risk, but by identifying the companies that are poised for success, investors can expect to see relatively consistent gains.
When you want to save money for retirement rather than near-term expenses, reliability takes precedence over speed. That’s why people trying to fund their retirement generally choose toinvest in bonds and mutual funds. All of these assets are relatively hands off, and feature the promise of practically guaranteed returns over time. With this type of investing, the goal is to beat the income generated by interest if you leave money in a savings account.
All three of these investment strategies are necessary to build a balanced portfolio, but the assets listed above are all tied to the stock market in some way. Investors who want to add true diversity to their investing strategy and gain further insulation from stock market variability should look to alternative assets that are not tied to the stock market like single-family rental properties.
The value of SFR investing
Real estate investing isn’t an ideal match for people who want particularly fast returns, but it is a terrific compliment to medium- and long-term investment strategies.
Every rental property can be financed, which makes this type of investing particularly unique. If you get a mortgage on an investment property, you can build equity in a physical asset that is likely to gain value over time for a relatively small initial expenditure. No other asset allows you to leverage financing in this way, and while it will take time to accumulate equity in the rental property, you start reaping cash flow yields immediately after tenants move into the space.
The income provided by rental properties doesn’t make these properties a compelling option for those who want to maximize short-term gains, but does help offset the cost of the home over time. In many cases, investors can use the monthly income provided by tenants to cover the cost of their personal mortgage payment. What’s more, you can benefit on your annual taxes bydepreciating the cost of the rental property over time, according to Zillow.
The type of growth possible with investment property differs depending on the home’s location. Before you invest, it’s critical to research different regions to understand the potential for gains.