You indeed must be familiar with the cardinal rule of investing - “Protect and preserve your principal”. The saying stands alone out in securing your portfolio.
Yes, it's true the idea of a perfect portfolio is highly personal and depends totally on the investors.
This means a strategy that works well for one might not be the right for the other. Speaking, there are multiple ways to build an investment portfolio. But, all the strategy trumps into one word i.e. ‘the ability to balance’. That’s why I decided to head on to find your secret sauce for your risk exposure and consistently appreciation of the properties value.
How does a Balanced Portfolio Exactly look like?
Often you will find most of the investors tend to put the entire money into one basket. They usually hunt for properties that generate positive income and consistently able to grow in value over time. But, in reality, this is not the case, because it’s not possible for anyone to find properties that offer both. You need to have some properties that deliver high rental yields and some properties with high capital returns.
Moreover, balancing a portfolio requires investors to adopt the policy of diversification. As investing in different properties can reduce the exposure to specific downturns and can help you to boost your income in either of the markets.
You have various options around you for making the investments:
Traded stocks
Paper assets
Commodities
Government bonds
Real estate
While it’s not possible to avoid risks entirely when investing in the markets, still adding real estate into your portfolio can make your investments free from the shortcomings of the traditional methods of investments. As the traditional methods had numerous faults in making a portfolio financially strong. Some of these are listed down:
Systematic Risks
When you invest in the markets, systematic risk is always present. But, you have a way to reduce it by adding non-correlating assets such as real estate. As non-correlating assets react differently to change in the markets compared to stocks, which often, tends to move in inverse ways. When one asset is down, another is up. In this way, they smooth out the volatility of your portfolio overall.
Stability in the Market
While investing in the stock market it's hard to stay invested in the ups-and-down market. Moreover, research says that trading in and out of stocks during volatile times leads to losses. But, this can be avoided by investing in real estate. As it is an asset with less liquidity and takes more time and effort to sell out. So, it is easier to hold on during the tough market cycles.
Return on Investment
In the stock market, commonly you will find investors buying at a low price and selling at a high price. But, this is not possible to do consistently as the market is unpredictable. It's not possible to know the rough of each company, it's a sector, management will invest.
In contrast with the real estate where you are dealing with individual properties and each zone being located differently, there is no set of the market for the exact property. There are thousands of little markets, where it's always possible to find good deals.
Control of Investment
The common phrase says, "Trying to time the stock market is a loser's game". But, with real estate timing, the market is possible and can even lead to huge gains. As the housing market is more stable and predictable than the stock market.
Moreover, as the housing prices move gradually, it gives investors enough time for the generation of information and to make smarter adjustments against their holdings.
The Final Words
Regardless of your situation, experience in knowing how to balance your portfolio can no doubt, help you to maximize your profit and minimize the risk.
Thus, to sum up is to say, “inclusion of real estate in your portfolio is not only the best way, the quickest way, the safest way, but the only way to grow your wealth”. As the more surplus you trap, the higher your borrowing power - and once you own the borrowing power, you can easily finance a property.
Assemonk, an innovative platform with growth assets, providing a superior quality of both residential, and commercial properties in all zones. “Committed to keeping you ahead”! Following our own motive that is to say, “You are not buying a house, you are buying a lifestyle”.
Hence, your choice is our concern! Hopefully, you’ve found your secret sauce deep inside the blog!! Kudos to go ahead!
