3 tools for reducing risk and increase potential financial success
Let's say you have a money machines giving you extra cash and received an increased on your salary of 80k every month.
How you are going to allocate the extra cash? Are you going to invest on stocks,mutual funds,real estate agent,bonds,uitf ?
The answer to this question will determine your financial freedom.
The three tools to reduce risks disclosed in money master the game by Tony Robbins according to David Swensen, the rockstar of institutional investing are the following;
1. Security selection- stock picking.
2. Market timing- short term bets on the direction of the stock market.
3. Asset allocation- long term strategy for diversified investing.
Application in real life;
1. Stock picking - selecting stocks that could give a potential returns of 8% annually or doubled in value at the time of retirement.
2. Market timing- PAM strategy, this is the strategy for market timing, calculating the entry point and collecting gains at a good amount of gains.
If you want to learn more join me on www.pamacademy.net .
3. Asset allocation or Diversification. Don't put all your eggs in one basket. Proper diversification is key to minimize risks. Real estate is my another chosen basket. Rental income from different properties, and income from the fruits of a farmland. The idea is to earn monthly and for future capital gains or appreciation on the value of the land.
There are many ways to reduce risks in the field of investing, the main reason you want to reduce risks is to sleep at night with a peace of mind. Investing should improve your quality of life not to give you a stressful life.
Happy Sunday and Have a great week ahead.
P.S. Thank you for those enrolled my Earn Extra 5k webinar thru blogging.