Financial wellness is all about thoughtful planning and disciplined money management. Looking back, I didn’t always prioritize investing, saving, or diversifying my financial portfolio. Over the years, we’ve seen the rise and fall of financial markets. Despite their fluctuations, diligent investors have enjoyed impressive returns from Wall Street since 2009/10. For the last six years, Wall Street has been on an upward trend, benefiting many portfolios.
Admittedly, I joined this financial wave a bit late. By the time I started investing, tech giants like Facebook, Google, Twitter, Tesla, and Microsoft had already skyrocketed. Despite this, I believe that the growth trend will continue, and my portfolio will eventually thrive. From my experiences, I’ve learned that the best financial portfolios minimize market risks over time, and dollar-cost averaging is a great strategy for investing in financial markets.
Instead of putting a large sum of money into mutual funds, single stocks, ETFs, or 401(k) accounts every few months, break it into smaller amounts and invest monthly. This approach gives you a more balanced entry into equities. For instance, by June 1st, 2017, Apple Inc. (AAPL) increased by 39% that year, Facebook by 33.52%, and Google by 26.40%. If I had invested in Google three years earlier, my returns would be 77.08%, Facebook returns would be 137.98%, and Apple’s returns would be 70.08%. Such growth can significantly benefit your portfolio, especially if you start investing early in your career.
For a long time, I kept my money in zero-interest-bearing bank accounts, and I was charged fees for it. A common fear of investing is market volatility and the potential loss of savings during a market downturn. However, consider the financial crisis when the Shanghai and Shenzhen composite indexes crashed in 2015/2016, wiping out trillions. Yet, China’s stock markets have since rebounded, and today China boasts the world’s second-largest economy. This resilience shows that even in bearish market conditions, investment opportunities can be better than letting money sit in a bank account.
Diversifying your portfolio is a smart way to protect your investments during market downturns. For instance, gold is a popular safe haven during times of geopolitical uncertainty, as investors often pull out of equities and invest in gold, Japanese Yen, oil, and Treasuries.
A valuable tip from an experienced options trading broker is to spread investments across domestic and foreign stocks, bonds, mutual funds, ETFs, and currency holdings. You might even diversify further with contrarian trading options, including CFDs and other derivatives. However, it’s important to manage expectations for immediate returns.
Before investing, keep in mind that unless you’re trading in high-risk futures markets with leverage and margin, patience is crucial. While cash in the bank provides a buffer against stock market volatility, it doesn’t hold up well during hyperinflation or periods of low interest rates. A balanced portfolio remains the best strategy for planning your retirement. Remember the golden rule: Don’t put all your eggs in one basket. A well-thought-out mix of indices, currencies, commodities, treasuries, and stocks is the safest bet today.