Over the past few weeks, we’ve aimed to make a few things abundantly clear:
First, blindly investing in stocks is not the move for 2019. Volatility is too high, and further price declines are likely.
Second, crypto prices might still be falling, but the fundamentals of this sector are only getting stronger — which means, at some point, cryptos will provide a major buying opportunity.
And finally, if you’re looking both to protect and grow your nest egg, the private markets provide a great alternative to traditional investments like stocks and bonds.
But to be clear, while each of these concepts is a good guideline to follow, to thrive in this market, you need more than individual guidelines — you need a “battle plan” that shows you how to put them all together.
That’s what I hope to give you in today’s article…
A specific plan that will help you minimize your risk, and maximize your returns!
Traditional Asset Allocation
For years, Financial Advisors recommended that investors start with a 60/40 allocation to Growth Assets/Fixed Income Assets.
That means you’d allocate 60% of your dollars to help grow your portfolio (e.g., stocks) and 40% to assets that generate income (e.g., bonds).
Then, as you got older, you’d shift to a 20/80 allocation.
The logic behind this was straightforward:
When you’re young, you can afford to take greater risks to grow your capital. But as you become older, and your goals shift to preserving your capital, that ratio would shift to favor more stable assets like bonds.
But given what’s happening in the markets today, that plan won’t help you right now — in fact, it could hurt you.
For 2019, you need a new plan.
New Growth Assets
You’ll still want to think about your overall asset allocation in the same way…
Meaning, depending on your age, a portion of your assets will still go into growth assets, while another portion will go into fixed income.
But the specific investments in each category do need to change.
Take your growth assets, for example…
Blindly investing in the broad market is fine if you’re in your 30s, with many years until you retire. But if you’re approaching retirement age — or already retired — then it’s unlikely you could afford to suffer a major decline in stock prices.
Which is why we’ll be looking to shift our growth assets into a few key areas in 2019:
First, we’ll continue to put more of our capital into private equity. As Matt explained here yesterday, private investments could have helped you earn from 41% to 55% each year for the past 20 years — even while the overall market returned low single-digits.
Next, once crypto prices bottom out and begin to rise again, we’ll start to put more money to work there.
In fact, since we wrote about Ethereum (ETH) potentially bottoming out a few weeks ago, its price has already shot up by more than 66%.
Finally, we’ll be adding specific stocks to our portfolio. Again, while the overall market might be headed for a significant decline in 2019, specific sectors and stocks will perform well.
For instance, we believe small-cap technology companies will be a bright spot…
According to a recent report from Investor’s Business Daily, Sebastien Page, head of T. Rowe Price’s global multi-asset division, small-caps “tend to benefit more from tax reform, are less exposed to trade risk and should be less sensitive to a stronger U.S. dollar.”
That’s how we’re planning to manage the “growth” portion of our portfolio this year.
Now let’s talk about Fixed Income.
New Income Streams
Although the Fed is hinting at continued rate hikes, given the slowing economy and the trade war with China, we believe the hikes will end soon.
That means yields for traditional fixed income assets like bonds and REITs will stay low.
However, as we’ve shown you countless times in 2018, there are ample opportunities to earn market-beating yields in alternative and private assets.
For example, earlier this year we showed you a unique “private market fund” that could hand you double-digit yields »
And a couple of months ago, we showed you an easy way to cash in on one of the most lucrative income streams in the world »
We’ll continue to share these lucrative income-generating ideas with you throughout 2019.
Prepare for Battle!
Those who aren’t prepared for volatility in 2019 could see their retirement plans evaporate.
Fortunately, you’ve made the decision to become a Crowdability reader — so you’ll learn about alternative ways to manage your capital.
This puts you ahead of 99% of the investing public, and even many professional investors we know.
But remember, reading our articles is just a first step…
To protect and grow your assets, you need to take action.
So, continue reading this free newsletter for new ideas, and also consider joining one of our premium research services.
You can find a description and a link to each of them at the bottom of this email.