If you’re looking to get your finances in order over the course of the coming year, then looking into your investment strategy might be worthwhile. With the world of finance evolving so rapidly, there are new opportunities and challenges being thrown up every day – so, how do you protect your investments in the year to come, and get the best possible return on them?
Diversification Across Asset Classes
One of the problems inherent in many new digital asset classes is volatility. If you put all of your eggs into the Bitcoin basket, in other words, you might see substantial gains – but there’s also the risk that the price will crash.
This is a problem that’s prevalent in the world of crypto, but not unique to it. Fortunately, there’s a simple solution. By diversifying your investment portfolio, you’ll spread the risk. If one of your investments crashes, then you’ll still have the others to pick up the slack. It’s worth diversifying not only within asset categories but across them. So, you might look at bonds, stocks, real estate, commodities, and more.
The prospect of crypto trading is one that’s increasingly tantalising, even for mainstream investors who might not have considered it before. The availability of easy-to-use trading platforms might make it easier than ever to invest in this asset class – although it’s still worth being aware of the risks that come alongside it.
Embracing Sustainable and ESG Investing
Investment decisions have been taken over the last few years, not just with a view of their cold, hard, financial consequences, but based on fuzzier criteria, like a wider benefit to society and the environment. Embracing ESG might help you seek out assets and companies that are governed better in the long term and that provide an ethical benefit as well as a financial one. What’s good for your bottom line, after all, might also be good for the planet.
Leveraging Technological Advancements in Investment Platforms
New advances in artificial intelligence and machine learning are helping to make investment platforms deliver new kinds of improvement for their customers. Trading strategies might, for example, be driven by algorithmic criteria, rather than gut instincts. This might ultimately lead to superior returns.
Focusing on Emerging Markets
Emerging markets provide new opportunities to those willing to invest in them. These markets tend to be more politically volatile, but they offer an extremely high return on investment, as there’s the possibility for big, quick wins in countries transitioning from agriculture-based economies to modern, developed ones.
Incorporating Alternative Investments
When diversifying, you might consider new, ‘alternative’ investments, as well as traditional ones. Private equity and hedge funds might lead to greater rewards, as well as the stabilizing effect that comes from a diverse portfolio.
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