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Investing isn’t just about you; it’s about creating wealth for your whole family. Whether you’re setting money aside for a family home, your personal retirement, your child’s education, or so that you can leave something for future generations, your investment portfolio is about building a better life.
How do you make sure you’re doing it right? What your portfolio looks like depends on your goals. How soon do you want to use the money? How much of it do you plan to withdraw at once?
However, a balanced portfolio that includes a mix of assets is always a reliable vehicle for creating wealth. Balanced portfolios split your money between assets with high growth potential and higher risk, with assets that are more secure and lower growth.
The combination helps your money grow in the good times without losing too much value in the bad times. It’s a portfolio designed for the inevitable.
High Growth
Growth is how you put your money to work, and the highest-growth assets tend to also have the highest risk. Stocks are the bread and butter of most portfolios because they promise the highest yields, but they don’t make a very secure asset.
That’s because stock markets can drop rapidly or stagnate for long periods of time. High-growth stocks are great for building wealth in the long term, but they are too unpredictable if you need to withdraw funds soon.
Generational Security
Do you worry about the effects inflation will have on your efforts to save for your retirement or for your kids? Inflation fears are high right now, and in the long term, there is too much unpredictability in the world to ever feel safe from it.
Gold is among the top assets that investors use to counter the effects of inflation. There is an enduring faith in the value of gold bullion as an alternative to cash, protected from inflationary effects thanks to global scarcity.
Buying gold is not like investing in stocks or bonds, but it can be included in registered retirement funds for a superior tax advantage. Talk to a bullion consultant to find out how to buy gold in a way that works for you.
Risk Management
Bonds have long been a standard low-risk asset, and they go a long way toward creating predictability in your investments. Bonds are effectively a loan to either a government or a corporation. The returns you earn on your investment are the interest they repay over time.
The problem is, interest rates are at historical lows, so bond yields are very low. Only 25 years ago, a 10-year government bond could yield over 7%, whereas today, bonds don’t even keep up with inflation. It’s driving some investors to explore other risk-management options, such as gold.
Generating Income
Finally, there’s the need to generate income. This is especially important once you hit retirement. There are several investment vehicles you can use to generate income:
- Stock dividend mutual funds that focus on stocks with historically high or increasing dividends;
- Immediate annuities to secure lifelong income in exchange for a lump sum deposit;
- Laddered bonds, where you invest in bonds with staggered maturities.
You can also purchase a rental property, but the risks and responsibilities that come with real estate are very different from your portfolio.
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