You can have a diversified global portfolio of ETFs, i.e., exchange-traded funds, that are linked to all the world's financial markets. Many an investor has fallen afoul of the many pitfalls in this market by failing to follow the basic principles of the game. The following five tips can do a lot to make your investment pay-off and give you fewer sleepless nights.
1. Liquidity: This is the crux of the matter. You must ensure that you have at least a half-year's worth of income stashed away for the rainy day before you even begin setting up your portfolio. This money can be invested in US Treasury bills or in a selected money market fund. With this "stash" you can have the confidence of being more creative with your investments and some peace of mind.
2. Create Separate Portfolios: You must create growth portfolios and conservative portfolios. The growth portfolios' main thrust will be capital growth, with capital preservation being secondary. The conservative portfolios will have a primary focus on capital preservation with growth being secondary.
3. Select Countries to Trade in Carefully: Do not let your enthusiasm get your investments locked in one country or in a particular region. Use the following to guide your investment preferences:
· overall corporate and political governance and stability
· legal environment, i.e., the rule of law, proper respect for contracts, corruption must be low-level and property rights
· strength of the currency, fiscal discipline, and the general macroeconomic environment
· political risks that could interfere with financial markets
The quality of the region or country to invest in, while key, is not the only factor. Another important aspect is the valuation and price of the stock market.
4. Reduce Company Risk by "Buying Countries, Not Stocks": Rather than selecting specific high quality stocks on the Tokyo Exchange, for example, you are best advised to reduce company risk by selecting to buy the iShares MSCI Japan index instead. This would have the effect of spreading your risk over the 225 companies tracked.
5. Level-out Your Portfolio: Once a year, at least, reduce your exposure especially in countries that are more volatile and/or are carrying high risk factors. You could accomplish this by selling off the successful countries and increasing exposure on under performers. This gives you another edge: you take some money off the table and also lock in gains.
To read more about making money with ETFs, click here: ETF trading Secrets
Jonathan Gibson makes his money from home and has an extensive experience in market trading. To get a Free blueprint on trading ETFs on trading from a 30+ year trader veteran, click here: ETF Trading Blueprint.
1. Liquidity: This is the crux of the matter. You must ensure that you have at least a half-year's worth of income stashed away for the rainy day before you even begin setting up your portfolio. This money can be invested in US Treasury bills or in a selected money market fund. With this "stash" you can have the confidence of being more creative with your investments and some peace of mind.
2. Create Separate Portfolios: You must create growth portfolios and conservative portfolios. The growth portfolios' main thrust will be capital growth, with capital preservation being secondary. The conservative portfolios will have a primary focus on capital preservation with growth being secondary.
3. Select Countries to Trade in Carefully: Do not let your enthusiasm get your investments locked in one country or in a particular region. Use the following to guide your investment preferences:
· overall corporate and political governance and stability
· legal environment, i.e., the rule of law, proper respect for contracts, corruption must be low-level and property rights
· strength of the currency, fiscal discipline, and the general macroeconomic environment
· political risks that could interfere with financial markets
The quality of the region or country to invest in, while key, is not the only factor. Another important aspect is the valuation and price of the stock market.
4. Reduce Company Risk by "Buying Countries, Not Stocks": Rather than selecting specific high quality stocks on the Tokyo Exchange, for example, you are best advised to reduce company risk by selecting to buy the iShares MSCI Japan index instead. This would have the effect of spreading your risk over the 225 companies tracked.
5. Level-out Your Portfolio: Once a year, at least, reduce your exposure especially in countries that are more volatile and/or are carrying high risk factors. You could accomplish this by selling off the successful countries and increasing exposure on under performers. This gives you another edge: you take some money off the table and also lock in gains.
To read more about making money with ETFs, click here: ETF trading Secrets
Jonathan Gibson makes his money from home and has an extensive experience in market trading. To get a Free blueprint on trading ETFs on trading from a 30+ year trader veteran, click here: ETF Trading Blueprint.
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