As a long term investor who builds wealth, resist the idea that markets can be timed and don’t waste precious time for the search of the best models for predicting them. Rather become an antifragile investor. Financial predictions rarely seem to come true. Rather than trying to become an expert in economics or the financial markets, make a practical plan. Your plan should be aimed at becoming antifragile.
Diversify your investment portfolio with uncorrelated or negatively correlated investments such as stocks, bonds, index funds, real estate, precious metals, cryptocurrencies and invest in small businesses that you understood and can control as a key shareholder. This gives you not only the chance of equity growth but also a steady flow of current income. Adjust your portfolio at least once a year but not more than every quarter.
The best way to become financially antifragile:
1) Diversify your assets into a minimum of 4 but better more of the following categories: cash, bonds, stocks, precious metals, options, rental real estate and cryptocurrencies.
2) Invest in quality, dividend-paying stocks. Reinvest the dividends, if not needed, immediately.
3) Create a start-over plan and a start-over fund that is equal to at least 6 months of income.
4) Don’t give up your active income. If you don’t have a job now, get one.
5) If you don’t own a business, start or invest in one that you understand and over which you can have some control.
Sven Franssen