Investing is all about finding opportunities where you can put your money to work and make it grow. Even if you’re not currently looking for new ways to invest, building a diverse portfolio of different types of assets will help protect against any future downturns in the market. Many great options are available to investors, including some that you might not have considered before. A risky investment today could pay off big in the future. It’s not always easy to find great investments. Still, suppose you’re looking for ways to diversify your portfolio. In that case, several promising investment opportunities may be worth a closer look.
Here are 7 of the most popular types of investments and some tips to help you invest in them:
1. Foreign Stocks
The best way to diversify your portfolio is by investing outside of your home country. An excellent place to start is with developed markets like those offered on the Vanguard Total International Stock Index Fund ETF (NYSEMKT: VXUS). If you want to add emerging markets exposure, consider making a small allocation to the iShares MSCI Emerging Markets Index Fund ETF (NYSEMKT: EEM).
2. Shorter-term Bonds
Bond prices go down when interest rates go up. Shorter-term bonds are better at protecting your portfolio against interest rate risk. Consider diversifying with the Vanguard Short-Term Bond Index Fund ETF (NYSEMKT: BSV).
3. Alternative Assets
While diversification is excellent, it’s also essential to focus on finding smaller investments with more significant growth potential. If you have some capital that you are looking to invest over the long term, consider putting it to work in an alternative asset class. It’s easy to get started with the V.A. neck Vectors Gold Miners ETF (NYSEMKT: GDX) or the Power shares D.B. Agriculture Fund ETF (NYSEMKT: DBA).
4. International Real Estate Investment Trusts (REITs)
An excellent way to diversify your portfolio is by investing in real estate. The Vanguard REIT Index Fund ETF (NYSEMKT: VNQ) invests in over 70 of the most prominent publicly-traded U.S. commercial real estate properties that are not office buildings.
5. Preferred Stocks
Preferred Stock is stock that has a preference over other classes of stock in the event of liquidation. In many cases, they tend to act as an alternative investment. This class of stock gets its name because it takes precedence over common or ordinary shares when it comes to receiving dividends, assets, and repayment in the case of liquidation. Fractional ownership can be transferred, while preferred stocks are often traded on exchanges like any other type of stock. However, they usually have some restrictions on transfer involving the need to get approval from the company to sell it. Preferred stocks are considered “equity,” just like ordinary shares are. Preferred stocks may also cover dividends in specific instances when a company cannot pay its compensation out of its profit or when the company needs additional funds. Preferred stocks may also have a call option allowing the issuer to purchase all outstanding shares at a specified price before a specified date.
6. Gold and Silver
Many investors choose to add a small allocation of gold and silver coins to their portfolio for diversification purposes. These metals are often called commodities, but they should be considered currencies due to their universal appeal as a store of value. You can buy physical gold and silver or choose from several ETFs, including the SPDR Gold Trust ETF (NYSEMKT: GLD) and the iShares Silver Trust ETF (NYSEMKT: SLV).
7. Alternative Fuel Vehicles
With rising gas prices and environmental concerns, more and more investors are looking to invest in companies that make alternative fuel vehicles. Companies like Tesla (NASDAQ: TSLA) and General Motors (NYSE: G.M.) have seen dramatic increases in their stock prices over the last five years as sales of electric cars increased. If you’re looking for other options, consider investments in producers of ethanol, which is used to make biofuel.
Closing Thoughts
There are many excellent investment opportunities out there for investors. Choosing appropriate investments for your risk tolerance and financial goals is essential. With some research, it’s possible to find some unique options that aren’t widely available through any other investment type. Investing and financial planning are the most critical aspects of building a solid financial future. By making informed decisions, it’s possible to build a portfolio that will allow you to meet your goals and dreams.
