With the new year around the corner, investors across the globe are preparing their resolutions and setting new investing goals. Many are choosing to leave their traditional investments behind, and instead invest in alternatives in 2018. Moreover, a growing number of investors are leaving their money managers and financial advisers, to manage their own investing portfolio and choose their own investments. These two trends could cause an upheaval in stock and bond markets in 2018.
It is the continued economic uncertainty and the constant threat of war in Asia and Europe, that has much of the investment community reassessing their tolerance for risk. In doing so, many are choosing to lighten their risk burden for 2018. This has lead to the increased popularity of alternative investments and an exit from traditional investments.
The fact that these new options/alternatives have a low correlation to stocks and bonds, makes them very appealing to investment-seekers. Both the daily volatility that accompanies Wall Street, and the overhanging risk of bond losses due to inflation, has grown tiresome. This has prompted investors to seek-out viable alternatives to introduce to their portfolio.
Since 2008, an increasing number of investors have been seeking information about investments outside of the traditional choices. The trouble is that financial advisers are not appropriately educated to guide investment-seekers through the alternative landscape. They are programmed to “sell” the well-established investments, like stocks and bonds.
If you are making the resolution to lower exposure to traditional investments, it is recommended that you seek investment advice from investors who have first-hand experience with alternative investments. These people are in the best position to relate the positives and negatives of pursuing an alternative investing strategy.
Undeniably, risk is an important part of investing. Although investors know that they must accept a degree of risk when making investments, they do not have to take unnecessary risks. For investors, 2018 is about eliminating needless risk with traditional investment alternatives.
In the face of political upheaval, war, and economic uncertainty, investment seekers are searching for investing options that, if faced with the worst case scenario, will offer them a degree of protection. At the moment, many investors see traditional investments – like stocks and bonds – as very risky and (in some instances) significantly overvalued. This has encouraged much of the investment community to move their holdings toward investment alternatives, and avoid unnecessary risk.
One of the most popular classes of alternative investments available to the international investment community is hard assets. This class is comprised of tangible items like shipping containers and collectibles (i.e. fine wine), that are appreciable and observable by investors. In most instances, these opportunities are managed and maintained by an asset manager, just as traditional investments are handled by fund or money managers. This is accommodating to people with a low tolerance for risk when it comes to investing their money.
Another investing strategy that has become increasingly popular with investment seekers is income generating investments. These are options that provide investors with consistent investment earnings. For some, this can be used to supplement income or reinvested to build wealth more quickly. In either case, investors appreciate earning steady money from their investment. It is satisfying and encouraging to move closer to investing goals.
For investment seekers who are interested in a hard asset that generates income, shipping container leases pay consistent returns to container owners. This option has been compared to rental income earned from real estate investments. The advantage of owning shipping containers over real estate is that containers are mobile and can be repositioned to the most prosperous regions across the globe. Commercial and residential properties obviously cannot.
When preparing an investment strategy, investors should carefully consider the performance of each asset in their portfolio, and measure the contribution made to achieving financial goals and investing success. Those investments that fail to demonstrate value should be sold and replaced with investments that avoid financial crisis and deliver steady returns.
When people begin to build an investment portfolio, they are immediately confronted with a number of choices and difficult decisions. These include, how much money to invest, where to invest, and how long to invest. The contributing factors in this investing road map must work in partnership to help investors to achieve their financial goals.
When determining how much money to invest, investment-seekers must pay close attention to their immediate financial health. It is essential that any money set aside for investing should be free of any monthly or annual expenses. That said, the amount invested each year should be based on financial goals. Having investment goals is important. It not only provides investors with a target at which to aim, they also provide the motivation necessary to stick to an investing plan.
There are several categories of investments, and many of those categories have thousands of choices within them. So, finding the right investment is not a trivial matter. The single greatest factor, by far, in growing long-term wealth is the rate of return received on an investment. The challenge for investment-seekers is to balance two things that are diametrically opposed: low risk and high returns.
How long you should invest for depends upon your financial situation, goals, tolerance for risk, etc. Honestly, the ideal time period to hold an investment is forever. Investors should only sell investments if something goes wrong at the fundamental level of the company. If the company has sound management, stable profits, and good growth prospects, then the long-term investor need not worry about fluctuations in the company or the economy.
Making good investments is a challenge whether you are an experienced or novice investor. Although choosing investments that balance risk and reward is at the forefront of people’s minds, there are several other important factors to consider when creating the road map to your investment and financial goals.