When it comes to creating a well-rounded investment portfolio, there are a lot of different factors to consider. But if you want a simple way to think about it, just imagine preparing your Thanksgiving table with all of its staple dishes.
Just like a Thanksgiving feast, your investment portfolio should be filled with a variety of different asset classes, each with its own unique role to play.
While you might be tempted to pile mounds of food onto your plate at your Thanksgiving dinner, when it comes to putting together an investment portfolio, there’s a little more strategizing involved in what gets added to the mix.
No one likes to think of the nutritional value of their Thanksgiving feast, but taking the time to balance the flavors and nutrients will help you stay healthy. The same goes for investing. It may be tempting to go all in with new and exciting investment opportunities, but this could create an imbalanced and unhealthy portfolio in the long run.
In the spirit of the holiday, consider building your portfolio like you would build the perfect Thanksgiving plate.
Whether you prefer dark or white meat or a leg, turkey is usually the star of the feast. Just like in your investment portfolio, whether your taste is owning rental properties, REITs, real estate syndications, or a mix of different flavors, real estate could make up for a big portion of your assets.
Real estate, REITs, and real estate syndications offer a number of benefits, including income potential, stability, and taxation benefits. They are also relatively low-risk investments, which makes them ideal for a diversified portfolio.
When it comes to income potential, real estate, REITs, and real estate syndications are hard to beat. They offer the potential for high, stable, and consistent income. This is especially true for real estate syndications, which often offer investors the ability to participate in the upside of investing in properties while relatively reducing the minimum investment amount.
Real estate investments are also relatively stable and can offer greater flexibility as they’re not subject to the same volatility as stocks and other asset classes. This stability can provide a buffer against losses in other parts of your portfolio.
So, when it comes to creating a diversified portfolio, real estate investments such as properties, REITs, and syndications are the meat of your assets. They’re like the turkey on your Thanksgiving plate: essential, delicious, and nutritious.
One way to think about it is that stocks are like stuffing. They may not be the most exciting part of the meal, but they’re still a key ingredient. Stocks are a good way to get exposure to a broad range of companies and industries and they have the potential to provide long-term growth.
However, loading up on stuffing comes with a risk. Depending on how the market is performing, the value of stocks in your portfolio can take a huge hit. So, you'll want to make sure that you have a good amount invested in stocks, but that it doesn’t make up your entire portfolio.
Just like stuffing, which is made up of a few different ingredients, adding different types of stocks to your investment portfolio is also a recipe for success. With dozens of stock varieties to choose from, such as mid-cap and large-cap stocks, domestic and international stocks, and growth and value stocks, their addition can help you diversify your portfolio even further.
There’s no denying that Thanksgiving is a pretty carb-heavy holiday. That’s why it’s important to balance your plate with some veggies, even when you might want a second helping of stuffing or turkey instead.
Mutual funds and ETFs are like the yams and green beans of your investments. They’re also made up of multiple ingredients, making it a quick way to ensure your portfolio isn’t only more diversified, but also nutrient-dense.
Mutual funds and ETFs provide you with a cost-effective way to gain exposure to a wide variety of different assets, all in one convenient package. And just like a helping of veggies, they can help to add some stability and consistency to your portfolio. Rather than owning individual securities, when they’re packaged in ETFs and mutual funds, you’re also mitigating the risk of owning these types of assets.
Depending on who’s in charge of cooking Thanksgiving dinner this year, some of the dishes could be quite bland. A dry turkey or overly-bready stuffing can make for a boring plate, but slather some gravy and cranberry sauce on them, and it’s a whole new meal.
Just like a decadent sauce makes the meal more enjoyable, private equity can add some flavor and make your portfolio more successful.
Investing in private equity is not without risk, but if done correctly, it can offer the potential for higher returns than other types of investments. If you turn to private equity firms, they’re typically managed by experienced professionals who have a deep understanding of the industry and the companies in which they invest, which helps you minimize risk levels.
Mac and cheese is a well-loved side dish, but you probably don’t want to eat an entire plate of it on Thanksgiving. In the same way, you don’t want to weigh down your investments with too many private debt loans, but a little bit as a complement to your other assets can help pad out your portfolio.
Adding private debt loans to your portfolio is yet another way to diversify your assets, but there are also other benefits. Debt and private loans can provide a steady stream of income, which can help boost returns. This stream of income can also help counter other high-risk assets in your portfolio and act as a cushion to help offset any losses that may occur in other parts of your portfolio.
Additionally, since private debt loans usually have a floating rate, they come with lower risk and are a good option for investors who want to protect their returns from inflation.
There are two types of people in this world: those who stuff themselves at dinner and those who enjoy it all but save room for dessert. When it comes to Thanksgiving, indulge in whatever you want, but when it comes to investing, leave room for some sweet alternatives.
Alternative investments can be as satisfying as a slice of pie at the end of a meal, but building an entire investment portfolio around can come with some risks. Whether your pie of choice is crypto, NFTs, racehorses, precious metals, or something else, their purpose is to add a little fun to your investments while potentially gaining from an asset class that’s totally separate from the performance of your other assets.
While alternative investments can definitely help soften the blow of other assets, especially when the stock market is impacted, it’s best to keep your allocation of these types of assets around 15-30% at most.
Just like a Thanksgiving feast, a well-rounded investment portfolio should offer a little bit of everything. By diversifying across different asset classes, you can help reduce risk and potentially boost returns. So, when it comes to creating your investment portfolio, don't forget to give thanks for diversification.
When it comes to everything you eat on Thanksgiving, it’s probably best not to keep track. However, with investing, keeping tabs on all your assets is the only way to ensure your portfolio is in line with your investment goals. Vyzer provides you with a wide overview of your investments, so you can see whether you need to swap your mac and cheese for more veggies, or indulge in another slice of pie.