All About Investment Portfolios

Investing, especially when you’re new to it, can seem quiet tricky. It’s normal to feel overwhelmed and confused about what types of investments exist and which ones you should be using. Really, though, it’s all a lot simpler than it seems, especially when you realize that almost all investments are going to fit into one of three categories.

Category #1: Stocks

Stocks are a very common type of investment and usually fall under the classification of common stocks or preferred stocks. Stocks are backed by companies, which, in turn, pay money to shareholders. How much money the shareholders will earn depends on how many shares they have. If you’re confused about what stocks to buy or how many, a financial adviser can help you to pick some safe bets to get you started!   

Category #2: Real Estate

Another way that you can invest is through property or real estate. You can actually own physical property or choose to invest via real estate investment trusts. In either instance, you will find that real estate is a good investment, especially for beginners, since it holds onto its value fairly well and is considered a fairly low-risk investment.

Category #3: Bonds

There are all kinds of bonds that you can choose from to start building money for the future. There are government bonds, municipal bonds, corporate bonds, and a whole host of other options. Fortunately, the right financial adviser can walk you through your options and help you to choose the right bond or bonds for yourself based on when you want to see your earnings, the level of risk you are comfortable with, and other factors.

As you can see, you have many investment options. If they all seem overwhelming to you, don’t worry. Just have a professional guide you through the process!

How Rising Interest Rates Affect Your Portfolio

If you’ve been paying any attention to the latest financial news, then you probably already know that interest rates are rapidly rising. What you might not realize, however, is that this could have an impact on your investment portfolio.   

There is also a widespread belief that the rising interest rates will create a bear market when it comes to bonds. Whatever may actually happen, these big rate changes can have a major effect on your portfolio, and you need to be properly prepared to handle these changes and still come out on top.

For one thing, make sure you own bonds. You can expect them to suffer somewhat as interest rates rise, but they are not nearly as volatile as stocks. Even when things get rough, bonds should earn you a consistent income and make your portfolio less volatile.

Other than ensuring that you own bonds, you will want to make sure that your portfolio is diversified, which means including some stocks into the mix, even if they are a bit less certain than bonds. If your portfolio is diverse enough, it should be able to make it through unexpected economic times and rising interest rates. Sure, it might suffer a bit here and there, but, ultimately, if it is balanced enough, you should still come out on top.