Every investor wants the highest returns possible. Getting the higher returns you seek requires smart financial planning, disciplined investment strategies, risk management, and knowing which investments are right for you. While there are no guarantees with investing, we have put together tips and techniques to help you increase your investment returns. Some of them may also help you avoid common investment mistakes.
Favor Equities Over Bonds
Equities typically have a much higher risk than bonds and return higher yields. It is best to lean towards equities but also include some bonds in your investment portfolio. The reason for doing this is that equities typically have returns higher than the prevailing inflation rate, while bonds help offset the risk equities carry.
Get Professional Help
It is understandable to be unsure about an investment or need personalized guidance, especially if you are a beginner. Seeking advice and guidance from a professional or experienced investor like James Cordier can help you understand how to invest better. They can also help you know which options are right for you, which ones to consider in the future, and how to diversify your portfolio for the best returns.
A financial advisor or investment strategist can also help you develop an investment strategy, especially when increasing your investment size.
Manage Your Investment Expenses
Many people forget that their investment expenses affect their returns, sometimes very significantly. The three main factors that determine your investment expenses include how you invest, structure your portfolio, and manage your investments.
With management, you have passive and active management. Passive management is often much cheaper than active management. It is typical to see a difference of between 1% and 3% between active and passive portfolio management costs. While this may not seem much in one year, think of the compounding effect of this difference for a larger investment portfolio over two or three decades.
Investing through a human broker is also more expensive than investing through a robo-advisor, while certain investments attract higher fees and commissions than others.
Investment According To Your Risk Tolerance
Every investor should continuously assess their risk tolerance depending on their goals and the amount they are investing. You should assess your risk before investing and be honest about the level of volatility you can accept. Both will determine how much risk you are willing to take and how much you are likely to lose should something go wrong.
In some cases, you should consider taking on more risk than usual. In investing, higher risks often result in higher returns, so taking these higher risks once in a while could be beneficial. As always, talk to your financial advisor or an investment advisor to understand the risks involved and see where those investments would be good for you.
Contribute To Your Investments Regularly
Consider contributing consistently and regularly to your investments. You can do this through regular monthly contributions, and doing so can help leverage dollar-cost averaging and reduce the impact market timing can have on your investments and investment decisions.
Conclusion
All investments carry some risk, and there is no guarantee of a return. However, investors can reduce their risk and exposure while increasing their investment returns by following a few simple techniques, such as those discussed above.
