Diversifying Your Portfolio: How to Weather Any Economic Climate

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Investing is a great way to grow your money over time without having to do much.  Even in strange economic times like these, savvy investors can grow their money without too much fear of economic conditions messing with their capital gains.  The best way to do this, according to conventional investing wisdom, is through diversification, the process of investing in a wide variety of markets and securities to safeguard against a collapse in any one area.

Diversification has been covered extensively online, and it is easy to find sound advice about how to do this effectively in normal economic conditions.  However, with the coronavirus pandemic throwing many industries and markets into disarray, the times are hardly normal.  Therefore, it (literally) pays to pay attention to some of the more unique market conditions that we face today, and diversify your portfolio accordingly.  Here are some areas to look into where you might be able to accomplish that:

Commodities: Gold and Other Metals

One of the hottest issues facing global economies right now is inflation, which is especially true in America right now. As a result, the best investments right now are going to be those that are less effected by rising inflation.  One of the best ways to do this is to invest in commodities like gold, which have a history of responding well to inflation.

There are other commodities that are worth looking into, of course.  Gold isn’t even the only metal that might be a good pickup: with rising demand for metals like lithium (think batteries of the growing electric car industry), investing in specialty metals with tech-related uses is likely a good idea.  You can also invest in energy, which is usually a safe bet, although you should exercise caution with regards to what types of energy you are investing in; energy expenditure is a highly political issue at the moment, and investing in more traditional energies like fossil fuels may wind up coming back to bite you hard in the future.  However, a well thought-out energy investment is hard to beat, as energy will always be in demand.

Housing: Rental Properties and Management

While housing markets around the world explode, it may seem strange to be talking about housing as an investment.  And indeed, if you don’t already own a property, it may not be the easiest investment to justify.  However, if you either have extra property already or the means to buy property without breaking the bank, this could be a very lucrative and easy means to make more money.

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Real estate and housing tend to rise with inflation, making them a more secure choice for your investments.  And there are multiple ways to invest in this world: commercial real estate is a great option, where you can buy into portfolios of properties that can help provide growth or stability.  Or you can buy your own property and do it yourself!  Multifamily property management isn’t for everybody, of course, so make sure you’re up to the task before you invest.

Cryptocurrency: A Potentially Lucrative Gamble

Crypto is a hot word in the financial world right now, and with good reason.  Since the creation of Bitcoin in 2009, it has been joined by countless other cryptocurrencies, and their combined market share has grow immensely.  One of the biggest crypto sites on the Internet, Crypto.com, has even bought the naming rights to the former Staples Center, solidifying crypto’s rise from little-discussed oddity to incredibly lucrative industry.

Crypto is a bit off the beaten path; not everybody is familiar with even the basic concepts that the entire enterprise runs on.  If you’re a new investor in this market, you’ll want to get acquainted with a few cryptocurrencies before deciding which one (or ones) are right for you.  While it’s a bit more of a gamble than other investments due to its seemingly inherent volatility, crypto can be a huge help to your portfolio in 2022.

Conclusion

The main purpose of diversifying your investment portfolio is to protect against market volatilities, and I think most people can agree that, in the wake of the pandemic, economic uncertainty is high.  While investing is generally considered to be a smart move, jumping headfirst into it without any significant plan can wind up hurting your financial situation more than helping it; going in with a plan to invest broadly can help you safeguard yourself against any market situation that may come up.  In these uncertain times, it helps to be able to rely on conventional wisdom of any kind, and while the current political and social environment may seem completely novel, it isn’t.  We’ve seen conditions like these before, and if you follow the collective wisdom that has been built up by investors over the last 200 years, you should be in good shape to grow your money in relative safety.

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