Any kind of investing comes with some risk. A lesson learned the hard way recently by cryptocurrency investors. Yet, investing is also the most reliable way to grow your wealth as you work toward retirement. That leaves potential and current investors with the lingering question:
How do you secure your investments?
Keep reading and we’ll cover some essential tips and strategies that can help you secure your investments without forcing you to become a full-time financial analyst.
One of the classic strategies for protecting your investments as a whole is diversification. Not all kinds of investments lose value at the same time or for the same reasons. The recent crypto plummet is largely a response to inflation and economic uncertainty.
While inflation and uncertainty are often bad for stock and bond performance, it’s usually good for things like commodities and real estate. Physical assets make people feel more secure.
If you have a mix of stocks, commodities, and real estate investments, they can balance each other out. You may not net a huge profit, but you can often avoid crippling losses.
A lot of investors will hesitate to sell an investment if they don’t have a new investment lined up to replace it. Some will hesitate even if the old investment has reached the right target for selling.
Don’t treat selling and buying as inevitably intertwined. They are separate decisions, and you should treat them that way.
Even if you don’t have a new investment lined up right this minute, new opportunities will present themselves. You will get more chances to reinvest. Don’t hang on to an old investment that may well lose value while you wait on those new opportunities to appear.
Not every investor wants to operate as a hands-on investor, especially when things get volatile. It can prove a time-consuming task if nothing else. This is where automated investing comes into the picture. According to the experts at SoFi, “Automated Investing uses computer algorithms to provide financial guidance and portfolio management for investors.”
In practice, this means that the investment company gets a handle on your goals for investment. Once they understand your goals, they can program parameters for your account. At that point, the machines take over the process.
The computers use those parameters to buy up or sell off investments that no longer meet your investment needs and goals. This helps keep losses down, while still supporting long-term wealth growth.
While it frustrates some investors, it’s not always the smart move to remain fully invested. That can expose you to unnecessary risk if things go completely off the rails. While cash in the bank won’t grow like other investment types, it’s also relatively stable. You can always reinvest that money down the road in six months or a year when things stabilize again. It’s not exciting, but it can save you from severe losses.
Securing your investments is practical and necessary. Fortunately, you can use strategies like diversification, strategic selling, de-investment, and automation to help keep your investment secure.