The investment world is dominated by gold, bonds, and stocks. As far as the average investor can see, that's where the money lies. And by and large, they'd be correct. Typically, those three areas are the ones that generate the highest returns. They're a historically sound investment. But if you've got money burning a hole in your pocket, they're certainly not your only option.
The market for them has become somewhat oversaturated as a consequence. This is ultimately going to lower their value, and that came to a head in 2008 during the market crash. If such tried and tested investments can take a hit, how can you be sure on what is going to provide sound returns for your initial outlay?
Liz Goldman offers her thoughts on the best alternative investments at Alternative Investment Coach. That's a good starting point for any would-be investor, but there's much more to consider. If you're considering dipping your toes in the world of investing, let's take a look at the areas you need to review. The same principles apply to even seasoned investment veterans, too.
History is a Thing of the Past
Many investors get hung up on the same area. They want a proven track record of success before they even consider putting money down on anything. That's quite the quandary, given that not all previous achievers can sustain their success. And, likewise, the next big hit on the stock market isn't going to give any indicators. Nobody could foresee Google becoming the behemoth it is today, but you can be sure those that took the risk are glad they did now!
Popularity Harms Return Potential
As I touched on earlier, oversaturation is going to lead to loss of value. The same is true in all walks of life, so why would the world of investment be any different? That is some predicament to find yourself in. If so many people are jumping in one area, it's a sure bet, right? Well, yes, in many instances, you're onto a winner. Great. But the winning margins are greatly depreciated by saturation.
Go Against the Grain
The most success you'll find in any investment scheme is to look for the stocks that are going to act defiantly in relation to the market. Everything goes through peaks and troughs, and plenty of them come out the other side unscathed too. But are they the investments that are going to generate the highest returns? No, I don't think so, anyway.
Owning investments that rise in spite of a falling market is a surefire way to guarantee higher returns. Is it the most profitable avenue? Probably not, but it is the least risky. Of course, you need to address the balance of your portfolio. Let's say you've invested in shares which balloon. What do you do with that money? You can either sit on it and hope it doesn't plummet, or you can rebalance your portfolio. That way, you're always ahead of the curve no matter what.