To become financially stable, you should build a portfolio with a long-term investment strategy. This could be an investment in stocks, bonds, real estate, growth startups or other investment assets. Most importantly, you must set a goal, diversify your investments, and reach your goal. In the era of investment, nothing is late unless you start it. Start a goal of a smaller portfolio, and over time, grow it to a more extensive portfolio.
There are many potential long-term investments to start with your goal. Today, I will discuss a few of my favourite ones.
Exchange Trader Funds (ETFs): My favourite long-term investment is investing in Exchange Trader Funds (ETFs). Investing in ETFs, you don’t have to consider diversifying portfolios and choosing individual stocks or asset classes and sectors. A single ETF consists of a large pool of stocks and bonds that covers an entire market, industry, sector, commodity, or currency. ETFs are less volatile, have fewer commissions and diversify enough. There are more than 3,000 exchange-traded funds or ETFs to choice. Based on your investment objectives, with a bit of knowledge and experience, you can pick and invest in very good ETFs.
Real Estate: Real estate is always a secure, long-term, and best-performing investment. Demand is constantly growing, and there is no sign of changing anytime soon. You can invest in single-family rental properties or commercial properties. Two things to consider here are that this investment requires a significant investment and a willingness to manage the properties. However, if you have less capital, you can go for Real estate investment trusts, AKA REITs, or real estate crowdfunding platforms.
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Investing in REITs is similar to investing in stocks and ETFs. The underlying assets are primary commercial properties, including office buildings, retail spaces, large apartment complexes, and more. A good part of it is that it offers a good dividend yield, and like stocks, it grows over time. In 2023, REITs provided a return of 11.7% when the stock market was heavily underperformed. A good REIT investment can bring substantial capital appreciation with less volatility and diversify portfolios.
The last option is investing through crowdfunding platforms. They are buying and selling commercial real estate.
Dividend Stocks: After the ETFs, my most favourite investment is dividend stocks. Dividends are the monthly or quarterly distribution of a company’s earnings to its shareholders in cash payout or the form of reinvestment in additional stocks. A good selection of dividend-yield stocks is a good investment when the market is volatile and a good addition to your long-term portfolio.
Bonds: Bonds are a more secure and fixed type of investment. They can be issued by corporations or governments in the short term or long term. Interest yield differs based on types and duration. Usually, long-term investment-grade bonds bring higher returns. The best part of investing in a Bond is securing a fixed payout to the portfolio and reducing the portfolio volatility that occurs in other types of investment.
Investment in alternative Assets: Alternative types of investments could be into commodities like energy, metals, agricultural products, or cryptocurrencies. Instead of investing directly, you can invest through commodity funds. These types of investments diversify and bring very high returns to the portfolio, but you must consider the risk behind them.
Long-term investments could provide a secure future or early retirement. However, to achieve it, you must also consider a few things. For example:
- Pick a proper strategy and stay on it for the longer term. If required, consult with an investment advisor.
- Know your risk tolerance and invest accordingly.
- Maximizing and taking advantage of tax-efficient accounts
Again, the most important thing is to diversify and balance the portfolio to earn a solid return over the long term.
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