We asked everyday people how they felt about investing and the opportunities available to them. The reasons why they invest are powerful, but most don’t know how to invest beyond stocks and bonds or where to begin. Investing should be inclusive, easy to understand, and available to everyone - and that's exactly what we're here do.
Your investment approach needs work. If you ever want to be a millionaire, you need to make some changes. You’ve likely put your investing on auto-pilot. You may be saving or investing a little money through financial apps, but most is done through employer-sponsored plans, such as 401(k)s or IRAs. This means most, if not all, of your money is being allocated towards stocks and bonds. You’re likely investing about 35% in bonds and 65% in stocks.
This can be problematic. In the event of a recession, you have the most to lose, as you likely won’t have enough invested outside of stocks to stabilize your retirement during a downturn. You could lose your hard-earned savings. Additionally, your annual returns are likely to be lower than other investments.
For example, if you earn $60,000, and invest 5% of your annual salary in stocks and bonds, your annual return is likely to be a mere $248. This comes to $2,480 over a 10-year period.
Compare this to the On-Par Investor, who stands to earn $6,408 over the course of 10 years, or The Millionaire Investor who will earn about $13,370 during the same time period. (These numbers are based on the same salary of $60,000.)
You’re on the right track, but your investment strategy needs a little work. You’re investing around 12 percent of your income, which is about average. If you can, you should consider investing more. You’ve also dabbled in alternative assets, meaning investments outside of stocks and bonds. You’ve likely allocated money to mutual funds or ETFs. However, you have yet to explore the investment options with the highest potential returns, like real estate investment trusts (REITs) or venture capital (VC) funds. You likely feel like you have a decent handle on investing, but you haven’t quite mastered the art – you could definitely use a little financial education and information about your investment options.
If, for example, you earn $60,000 a year and invest 12% of your income – 50% stocks, 30% bonds and 20% mutual funds – you’re likely to see an annual return of around $640. If you continue to make the same investment decisions and experience no changes to your income, you would likely accumulate $6,400 over a 10-year period.
Compared to The Underachieving Investor, expected to only accrue $2,480 in annual returns over 10 years, you’re doing great! However, you need to make some adjustments if you want to be on par with The Millionaire Minded Investor. Based on the same $60,000 salary, they’re likely to see around $13,370 in returns over a 10-year period. What are these investors doing that you aren’t? They’re investing about 20% of their income across an average of five different types of investments.
You are a rock star when it comes to investing – congrats! You know how much of your income to invest and what types of investments should be included in your portfolio. You’re likely investing around 20% of your total income across five or more asset classes. Based on a salary of $60,000, you’re likely to bring in about $1,337 in annual returns, which comes to a whopping $13,370 over a ten year period.
Though you have this investing thing down pat, there’s always room for improvements and reallocations. The hottest asset classes of the year are peer-to-peer lending, real estate, gold, owning your own business and equity crowdfunding – if you haven’t already, you should consider investing across these categories.
Everyone should make sure a portion of your portfolio is dedicated to defensive investments. This is an important strategy that the 1% use in order to up their wealth game. What is a defensive investment? Read about the different types of defensive investments here!
Stocks and bonds are not the only investment vehicles out there! So what are alternative investments, why are they important, what are the advantages and drawbacks, and how can you get started? Continue on to find out…
When the stock market goes up one day, and then goes down for the next few days, then up again, and down…you get the picture…that’s what you call stock market volatility. Learn more on how you can give your portfolio an added layer of protection today!