S3E25: Investing Part 2 – Diversifying Your Investment Portfolio

Residual Income - Wealth Strategies - Financial Freedom With Murray Miller

Welcome to Part 2 of ourJourney into Investing episode, where we will take a deeper dive and I’ll provide some examples of each investment category I mentioned in Part 1.

1. Stocks: When it comes to stocks, there are thousands of companies to choose from. Let’s take a look at an example: Apple Inc. (AAPL). Over the past decade, Apple has shown remarkable growth, with its stock price increasing from around $10 per share in 2013 to over $182 per share today.
2. Bonds: Government bonds are considered relatively safe investments. One example is the 10-year U.S. Treasury bond. Historically, these bonds have provided consistent interest payments and returned the principal amount at maturity. Currently, the yield on 10-year Treasury bonds is around 3.75%, but this can vary depending on market conditions. As of the recording of this episode you can actually deposit money in High Yield money market accounts paying 4-4.5% however you won’t have the tax benefits associate with government bonds which are generally exempt from Federal tax!
3. ETFs (Exchange-Traded Funds): An example of an ETF is the SPDR S&P 500 ETF (SPY). This ETF tracks the performance of the S&P 500 index, which represents the 500 largest publicly traded companies in the United States. By investing in SPY, you gain exposure to a diversified portfolio of stocks across various sectors.
4. Index Funds: Vanguard 500 Index Fund (VFIAX) is an index fund that mirrors the performance of the S&P 500. It aims to replicate the index’s returns by investing in the same stocks in the same proportions. Index funds like VFIAX are known for their low fees and provide a simple way to gain broad market exposure.
5. REITs (Real Estate Investment Trusts): One example of a REIT is Realty Income Corporation (O). Realty Income is a publicly traded REIT that focuses on owning and operating commercial real estate properties. It generates income through long-term lease agreements with its tenants, making it an attractive option for investors seeking real estate exposure.
6. Cash Value Life Insurance: Whole Life, Variable Life and Indexed Universal life insurance policies, offered by a handful of top notch Insurance Companies, are an example of cash value life insurance. These policies provide both a death benefit and a cash value component that grows over time. The cash value can be utilized for investment purposes or taken as a loan, providing flexibility for policyholders. There are tremendous tax benefits in addition to compound interest when these policies are structured properly.
7. Cryptocurrency Stablecoins: Stablecoins like Bitcoin (BTC) and Ethereum (ETH) have gained significant attention in recent years. Bitcoin, the first and most well-known cryptocurrency, has experienced remarkable growth. For example, in 2013, Bitcoin’s price was around $100 per coin, and as of now, it’s trading at over $25,000 per coin. Ethereum, another prominent cryptocurrency, has also shown impressive returns over the past decade.

Remember, before investing in any asset, it’s crucial to do your research, understand the associated risks, and consider your investment goals and risk tolerance. Diversification across these investment categories can help mitigate risk and capture potential returns from different sectors of the economy.

The above information is for example purposes only and should not be used as investment advice. It always is recommended you consult a professional Financial Advisor and Tax Professional and determine your level of risk tolerance prior to making any investments.

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The post S3E25: Investing Part 2 – Diversifying Your Investment Portfolio first appeared on The Family Business.

The post S3E25: Investing Part 2 – Diversifying Your Investment Portfolio appeared first on The Family Business.