Diversifying your portfolio should be a long-term goal for any investor. Making sure that you are setting yourself up for long-term success is the name of the game in investing. When you are working with a long-term investment plan, you are essentially making a bet on what the future ten to twenty years will look like. Looking back at the baby boomer generation and what that did for the economy in the 80’s and 90’s might be an indicator of what’s to come with the millennial generation. Millennials, while slower to leave their parent’s home, will be entering the market in a big way in the next 10 or so years. This is a huge thing to consider. Here are five things that we think will help add the stability you are looking for.
Bonds are a great fixed income way to add stability to your portfolio. For a typical investor, you should allocate near 30% of your portfolio to bonds. Make sure that you know what you’re doing when purchasing bonds. Not all bonds are as safe as ones from the treasury for example. With the higher reward, comes higher risk. The goal of investing in bonds is to take a safer bet and round out your portfolio.
Investing in real estate can add stability to your portfolio. Investment properties you can resell ten to twenty years later, or you can use them as rental properties to add to your monthly income. If you are handy, you could also buy a fixer-upper or auction property and spend some of your time working on it to rent it or flip it. Check out Colorado Springs real estate for some properties that would add value to your portfolio.
This simple investment is a guaranteed safe bet. Creating a laddered CD portfolio will allow you to reinvest the CD after it matures and at a higher percent. You will be able to take advantage of low-interest rates at the beginning and reinvest as the interest rates rise. FDIC insurance is now up to $250,000 per account, so this is perfect for long-term investing.
If you are a more conservative investor, utility stocks might be the thing for you. Because there is a never-ending need for energy and water, this makes utility stocks a stable investment. For years, utility companies have paid out dividends to their many investors. The price has remained relatively stable making this a long-term solution for your portfolio.
Fixed annuities usually pay a slightly higher rate than a CD. This is a favorite option for creating retirement income because of its ability to bring in steady returns. It is thought that fixed annuities will continue to rise over the next few years, which makes this an even more attractive option for your retirement portfolio. Even better, they are guaranteed for interest and principal in the event the carrier must file bankruptcy.