Investing is hard—that’s why so many of us turn to financial advisors. However, no matter how useful they might be, sometimes they’re a little too safe. Here are twelve hidden investment secrets that advisors won’t tell you about. Whether it’s because these tips need a bit more DIY or simply because they’re not on most advisors’ radars, these tips are well worth considering!
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Beyond the Usual Retirement Accounts
Everyone talks about 401(k)s & IRAs but there are so many other options. Have you heard about Health Savings Accounts (HSAs)? What about 529 College Savings Plans? HSAs give you triple tax advantages for medical expenses while 529 plans let you grow your money tax-free for education costs. Try looking at other accounts!
The Steady Charm of Utility Stocks
While most of us are obsessed with the next big thing, you can’t forget about the old & reliable methods. Utility stocks, for example, may not be as flashy as tech stocks—yet they’ll give you more stable dividends. As such, investing in utilities is useful if you’re looking for something that won’t keep you up at night.
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Peer-to-Peer Lending Platforms
Imagine lending money to a friend to start a business and then getting paid back with interest—that’s the idea behind peer-to-peer (P2P) lending. But it’s on a larger scale! You use platforms to connect with people or small businesses looking for loans, then earn some pretty attractive returns. Of course, it’s risky and that’s why some advisors avoid talking about it.
Dollar-Cost Averaging for the Win
As volatile as the market might be, there’s a way to smooth out the bumps. Investing a fixed amount of money regularly, regardless of the market’s ups & downs, will help you lower the average cost of your investments over time. Just think of it like turning a chaotic expense into a manageable monthly subscription!
Smart Placement of Investments
Naturally, talking about balancing your portfolio is rather common yet where you keep your investments is just as important. Some investments are better off in tax-advantaged accounts to keep more money in your pocket. Don’t just focus on what you’re investing—think about where you’re putting your money, too.
The World Beyond Stocks and Bonds
There’s a whole universe of investment options beyond the usual stocks & bonds. For example, real estate, commodities—even investing in collectibles can make your portfolio a little more interesting. It’ll also give you greater protection against inflation! As such, you should explore options outside of the norm.
Auto-Pilot Your Dividends with DRIPs
When you get dividends from stocks or mutual funds, you can use them to buy more shares automatically. This process is called a Dividend Reinvestment Plan (DRIP) and it lets your investment grow over time. Best of all, you can do it all without having to lift a finger—now that’s what we call passive income!
Personalized Investing with Direct Indexing
Buying the exact stocks that make up an index allows you to customize your portfolio. In some cases, this is a better idea than buying through a mutual fund or an exchange-traded fund (ETF). You’ll manage your taxes more efficiently and invest in a way that’s perfect for you—what could be better?
Leveraged and Inverse ETFs
Speaking of ETFs, leveraged and inverse ones may have serious consequences for your portfolio. Yes, they’ll give you the chance for high returns—but also with high risk and that’s why they’re not for everyone. If you’re up for it, they can be an exciting addition to your investment plan as long as you make sure you know what you’re getting into.
Generate Income with Covered Calls
If you own stocks, you can sell call options against them to earn income and this strategy is known as writing covered calls. It’ll give you a little extra cash flow & some protection against price drops. While the returns may not be huge, they’re still worth it if you know what you’re doing.
Keeping an Eye on the Global Scene
It’s easy to focus on your own financial goal—but global economic trends will affect your investments. As such, you’ll need to stay informed about international developments. It’ll help you adjust your strategy to better understand the global market which will help you make greater choices.
Don’t Overlook the Importance of an Investment Journal
Even though keeping a journal sounds old school, it’s still important when investing. Writing down your decisions, the reasoning behind them—even writing how they pan out over time will give you important information. Later, you can use this to improve your investing skills and become more strategic about where you put your money.
Disclaimer: This list is solely the author’s opinion based on research and publicly available information.
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