Preserving capital is critical during turbulent times. Adding regularly to savings and investing in securities, either equities or fixed income, that compound over long periods of time will bring you solid returns.
Here are some ideas you can put to work to grow your portfolio.
1. Diversify by investing your portfolio in a mix of securities. Depending on your risk tolerance look towards stocks, bonds and mutual funds. Unit Investment Trusts, Real Estate Investment Trusts, precious metals and overseas funds may also help to diversify your holdings.
2. Keep enough money in reserve to pay three to six months worth of expenses. Start now if you have not already done so and keep these investments liquid. You want to be able to get to them fast without the worry of a penalty.
3. Take time to learn about investments and finance. Over time it will allow you to become more comfortable with the strategic and tactical decisions you make with your money. You should also allot some research time if you ever decide to use a professional financial planner. It will help you understand what they are saying and why they are saying it. You will also be able to ask better questions and receive more detailed answers.
4. If you do end up hiring a professional, find one that will work not only with you but your accountant and lawyer if applicable. This does not let you off the hook with regards to self-education but financial planning can get complicated and you probably have enough going on at work and home. Professionals can help reduce your risk and stress.
5. If your company has a matching 401k contribution you should fund it in order to receive the full match. If the expense rates are low enough on the offered investments then max out your contribution. You can still contribute to an IRA but you should understand the benefits and restrictions on these accounts.
6. Don’t forget to review your accounts at least once per year. Every six months would be better. Unexpected life events are also a time when you need to consider a review. Even positive events, like receiving an inheritance or gift should be regarded as an opportunity to bolster your portfolio while being prepared for a possible tax burden.
7. Save and invest regularly. This may be the most important point of all. Discipline over the long term is the number one thing that gets you to your financial goals.