It’s time to make your investment portfolio great again!
A great new year is dawning, and it’s bringing fantastic opportunities for individual investors to make their investment portfolios great again. This is an exciting and pivotal moment which offers the ability to make up for past years, and to position for ongoing financial prosperity. Will you seize the chance, and make the right money moves?
Making America Great Again
Love or hate Donald Trump, he is on a mission to “make America great again.” You might not agree with some of the opinions he has voiced, or everything he stands for. You might hate him. But the bottom line is that he has posed some initiatives which could definitely help the American economy, certain asset classes, and investment portfolios. Even more importantly; markets and consumers have reacted very well to the news of the election results, and are operating with intense new optimism.
What we are experiencing now are some dramatic changes and trends which will alter the investment landscape and portfolio performance of millions of Americans, and international investors.
Navigating the New Investment Landscape
The Trump administration and market reactions are transforming the investment landscape into both a minefield and a goldmine. Whether your portfolio ‘blows up’ in a good way, or a bad way, will depend on the money moves you make over the next few months.
The market is deceptive right now. That creates both challenges and opportunities. For example; we have the Dow Jones pushing new highs of 20,000. At the same time economist Harry S. Dent who successfully called previous crashes has predicted the Dow will dive to just 6,000 again! Gold value has taken a sizable hit, and will likely continue its slide while other investments are performing well. We keep hearing about how hot tech companies like Uber keep pushing valuation ceilings, to the tune of billions of dollars, while they are still losing billions every year. That’s not sustainable.
We do have Trump’s vows to ease credit for small businesses and home buyers, promises of creating more jobs, lower taxes, and massive investment in infrastructure to be optimistic about. How can individual investors capitalize on this, and truly expect to make their portfolio’s great again?
What Does A “Great” Portfolio Mean?
“Great” can be a little ambiguous, right? So, what makes a great investment portfolio?
Being a doctor I think of great as in terms of being both healthy and vibrant. There’s no point in just looking good on the outside, if the inside is about to fall apart, right? There are plenty of bodybuilders and models who may appear attractive on the exterior, but are ticking time bombs when it comes to their real health. Other people may appear to be in sound physical health according to their charts, but they are dealing with issues which are preventing them from really going anywhere or living up to their full potential.
5 Traits of a Great Portfolio for You to Keep in Mind:
- Attractive returns
- Peace of mind
- Ease of management
- Net gains (after taxes and fees)
- Something you are proud of investing in (positive impact)
It’s not a great investment if the returns are subpar, and a barely keeping up with inflation. Those investments will likely be net losers when you do the final math after fees and taxes. Right now that might include investments like bonds, CDs, and basic funds.
Investors aren’t enjoying a great portfolio when they are in constant fear of losing money, or have to be involved in daily management to get their investments to produce either.
Then, as much as Warren Buffett’s mentor and author of the Intelligent Investor, Benjamin Graham says “investment is best when most businesslike,” a truly great portfolio is made up of investments you are proud of making. Despite our need for money, most of us don’t want to be contributing to problems of pollution, predatory businesses, harmful products, etc. It’s best when our investments are in alignment with our values to help the community around us, and leave some tangible improvement in the world.
The Rules of Investing
For way too long we’ve been groomed and programmed to look at all the wrong metrics when it comes to investing. Schools continue to do a miserable job at teaching financial education. Much to the benefit of big finance houses, fund managers, and stock brokers. If we stick to the golden rules of those that have proven to be successful, then we quickly clear out a lot of the noise we are bombarded with.
When it comes to picking investments for our portfolios to make them great, we MUST look for:
- Sustainable investments
- Downside protection with hard asset collateral
- Inflation beating performance
- Above average returns
- High upside potential
- Control over, and transparency in what we are investing in
What To Invest In Now
For me, all of the above, and Trump’s affinity with real estate confirms that real estate is one of the best asset classes to bulk up on in 2017. It checks all the boxes, and has proven to deliver great returns.
There are a number of ways to invest in real estate this year:
- Direct investment in rental properties
- Commercial real estate development
- Fixing and flipping
- Private lending to active investors on the front line
Diversification vs. Specialization
Given all of the above factors one of the biggest changes investors will be challenged with is diversification versus specialization. For a long time we’ve been programmed to “diversify, diversify, diversify.” Why? Because if you ask your stock broker; they genuinely have no idea which stocks or funds are going up or down, or will perform best. They just don’t. So, they suggest to diversify as broadly as possible. Remember this…. Diversification is oftentimes protection from ignorance. They may provide some moderation when things go down, but normally just waters down any good results as well. There is sense in not putting all of your eggs in one basket. However, look at investment leaders like Buffett and Peter Theil. They go heavy into the investments they like. In his book Zero to One, Theil specifically points out that investors should be focusing more, as the majority of their gains will come from just one or two of hundreds of selections. It’s like in the medical world – who makes the most money and ROI on their time? Is it the general practitioner, or the specialist? Who’s position is safest?
If you’ve followed my investments you know I ditched stocks and haven’t looked back. I do enjoy investing in a variety of projects, though today that is almost exclusively all in real estate mixed with a few private equity business projects. I have residential rentals, development projects, and fund flippers with private lending. This year I hope more investors will also have the guts to make stronger investments in what is really working, and reap the benefits of it.
I invite you to make your portfolio great again this year. There will be unexpected challenges for those that don’t make smart moves now. There are great rewards ahead for those that make intelligent adjustments. These next few weeks leading up to tax time, when retirement account contributions can be maximized for 2017 and 2018 are the ideal time to make bold moves, and save on taxes too!