I’ve been actively managing my investment portfolio for a while now, primarily focusing on forex and stocks. However, I’ve been contemplating diversifying into other asset classes to spread out risk and potentially enhance returns.
I’m particularly interested in exploring options like commodities, cryptocurrencies, and maybe even real estate investment trusts (REITs). Before I dive into these new areas, I wanted to reach out to this knowledgeable community for some advice.
For those of you who have diversified your portfolios beyond forex and stocks, could you please share your experiences?
What asset classes have you found to be promising, and what strategies have worked best for you?
Forex is not an investment vehicle for private individuals, but it is a good vehicle for short-term trading. Forex trades are typically held only for weeks at the most, sometimes only for minutes, so diversification of forex pairs is irrelevant. There are only 28 important forex pairs, and the costs of trading the many others outside this group are high.
If you are trading forex short-term, diversification of strategies could be a useful way to be prepared for unexpected market cycles and events.
Forex is so suited to short-term trading that I’m not convinced you need to be trading any other markets.
Hi,
A long, long time ago (and I mean over 30 years ago) I read an ancient version of the Financial Times Guide to Investing, a more recent copy (2009) of which can be bought on e-Bay for less than five bucks. The Financial Times Guide to Investing for sale | eBay
I got a 30+ year head start on you here. I often say to people that if they want to do well with investing, follow what I did, but choose the opposite direction to what I decided at the time, and you should be rich in no time. Ten years ago, after a good night out with my brother, I decided to create a project that I generically titled “Get Rich Slow” since all our combined madcap ideas of the previous 2 decades had not resulted in life impacting results. It started with Get Rich Slow #1 (GRS1) and the most memorable and long lasting “schemes” to get rich slow were GRS10 and GRS12 the former of which was Forex trading (and stock trading to a lesser extent) and the latter of which turned out to be crypto trading. Even longer term pursuits mainly gold and silver, predated GRS1, and they are still active components.
At one stage I likened my life to a well tuned vehicle running on four cylinders, each cylinder being a source of income or an investment of real value. It was a primary “job” as an IT and management consultant, a secondary earned income managing a buy to let residential property portfolio, a long term interest in gold and silver via a zero counterparty risk vehicle in London, and a deep dive into crypto currencies four years ago (we were late to that market).
At the worst time in 2022 and 2023, we were only firing on one cylinder, but our situation has returned to health and we are now firing on three cylinders with a high probability of firing on all four by mid 2024.
Best of luck with the portfolio diversification. You can go too far to each extreme. My only regret (and it is not really a regret) is having increased our property borrowing ten fold within one fateful year (2007) when we went “all in” with property in what has turned out to be the worst decade and a half to do that in. I have never used a financial advisor after I went (technically) bankrupt in 1985 and decided to carry that debt and return to my career of competence in the oil and gas industry after a failed business. I have taken all financial decisions since myself, simply because I am happy only having myself to blame for the consequences of my own decisions. What is the point of blaming an FA when he is either dead or retired, and has had all his fees from you without any care for the long term performance of your portfolio. Die poor and independent, that’s what I say.
When it comes to diversifying your portfolio, the key is spreading your investments across different sectors so you’re not putting all your eggs in one basket. For example, you could consider a mix of stocks, bonds, real estate, and maybe even some alternative assets like collectibles or digital stuff. One area I’ve been looking into is awp skins cs2 – it’s not traditional, but digital items like that can add an interesting twist to your mix. Just be sure to balance it with safer options, like bonds or index funds, especially if you’re new to investing. The main thing is to find a balance that suits your risk tolerance. Diversification is all about reducing risk while still trying to get decent returns.
Are you investing or trading? These are 2 completely different things, as I’m sure you know. With investing you’re looking well into the future 20-30+ years, towards your retirement. And it’s never advisable to use borrowed money or leverage when investing as these come with higher costs that will erode your returns.
With trading you’re usually using a leveraged account, and looking at short-term transactions, as said above. However, similar to investing you need to be aware of currency correlations.
Other ideas for investing that I don’t think have been mentioned are securities that offer dividends. Dividends are another source of income, however you need to invest a LOT to receive a decent, steady income on dividends alone.
