A tenant move-out checklist lets you inspect a property and decide how much security deposit to return.
The post Follow This Checklist When Your Tenant Moves Out appeared first on The Rent.com Blog : A Renterâs Guide for Tips & Advice.
With the swings weâve seen in the stock markets lately, investing can feel like a risky venture. We all want to reduce risk in our lives, but many people don’t think about diversifying their portfolios and how it relates to risk reduction. Some people may think that they are diversified, but in reality they hold a basket of similar stocks or bonds that all react in the same way to market events.
So, what is proper diversification, and how does it reduce risk? This article will discuss what a diversified portfolio should look like and how it reduces risk to help you reach your financial goals.
The concept is simple enough, yet many people fail to diversify their portfolios properly. Some people may receive stock options at work, and others may have a high conviction in a particular company. Still, the result creates an overly concentrated portfolio exposed to a high degree of risk entirely based on one or a few companies. Failure to properly diversify can cause many portfolios to have a much higher risk than an investor is comfortable with or even aware of.
For an investor to truly have a diverse investment collection, they need to invest in several different asset classes and sectors that will react differently to market events.
These asset classes and sectors will have moments when they are performing better than other categories, but no asset class or sector remains at the top forever. By spreading out your risks, market anomalies will have less of an impact on your portfolio. Think of it as betting on multiple horses in the race rather than just one.
Just because a portfolio is diversified doesn’t mean it is guaranteed to go up in value. Some events will impact the broad financial market. For instance, during the 2008 financial crisis, only bonds and cash had positive returns for the year. Large-cap growth stocks fell by more than 38% in that year, and international stocks lost more than 41%. A well-diversified portfolio would’ve had negative returns in that year between 20% to 30%, but it still would’ve had better returns than the worst-performing categories of the market.
A diversified portfolio will likely have a better risk-adjusted return over a long period. While the diversified portfolio will never have returns as high as the top-performing sector, it will also never be at the bottom. A diversified portfolio will achieve the average returns of all the sectors invested with lower volatility along the way.
For example, in 2020, due to a decline in oil and gas consumption, energy companies lost 33%, making that sector the worst-performer in the S&P 500. All the while, the broader index rose over 16% for the year. However, as the COVID 19 lockdowns came to an end, energy consumption returned strong, causing energy to be the highest performer of 2021, with a 54% return. A broadly diversified portfolio across the S&P 500 would’ve seen an 18% gain in 2020 and a 29% gain in 2021, resulting in more than 52% return over two years. An investor solely concentrated in the energy sector would only be up 2% after recouping from their losses in year one.
Another example that spans an entire decade would be the 1970s. This decade experienced stagflation due to high unemployment, high inflation and low economic growth. The Dow Jones Industrial Average began the decade at 800 and closed it out at 839 points. Bonds had a negative real return after inflation. However, real assets like commodities and real estate did well due to higher-than-average inflation. Gold had a 10x return, while silver had a 15x return over the decade. REITs generated an annual return of 16.3%. Someone broadly diversified across multiple asset classes would’ve seen a better return than someone solely invested in stocks and bonds.
Diversification is an essential element to minimize the risk of investing. Allocating investments across different asset classes and sectors can help stabilize your returns because no single sector or class will have as much impact on the overall performance of the entire basket.
Over time, even if some assets perform poorly, others should offset them so that you don’t see too significant an effect on your overall performance.
While most of us start our banking journeys with one checking and one savings account, as our financial lives get more complex, having more than one checking account can make sense. Especially because having more than one bank account can make it easier to manage the comings and goings of funds. Keep reading for insight […]
The post Are You Allowed to Have Two Checking Accounts With the Same Bank? appeared first on SoFi.
Wall Street received a painful reminder this year that the stock market isn’t a free-money machine. Stocks don’t always march higher, and the risk of declines, if perhaps only temporary, are very real. Dividends, however, allow you to realize consistent cash returns and avoid the need to sell at inopportune times â and few areas of the market produce higher dividends than business development companies (BDCs).
Business development companies are like private equity funds for the common man, though they have some important differences. Whereas private equity funds tend to be opaque, have long lockup periods and are restricted to high-net-worth and institutional investors, BDCs are publicly traded on the stock market and are completely transparent.
BDCs make debt and equity investments primarily in “middle market” companies that are generally a little too big for bank financing but not quite big enough to go public via an initial public offering (IPO). They invest in the proverbial Main Street ⦠or at least, this is as close to Main Street as Wall Street gets.
Main Street suffered much more than Wall Street during the pandemic, so it’s not surprisingly that many BDCs entered 2022 below their pre-COVID prices. Their cheapness relative to the rest of the market makes them attractive, particularly given that BDCs are also some of the highest-yielding stocks you’re going to find.
Like their cousins, real estate investment trusts (REITs), BDCs were created by Congress to encourage investment in the real economy, and both benefit from preferential tax treatment, paying no income tax at the corporate level so long as they pay out at least 90% of their net income as dividends.
This is why BDCs and REITs generally have such high dividend yields. They’re legally mandated to pay out nearly every red cent, and the absence of taxes makes more cash available to pay.
Let’s look at five of the best BDCs to get our portfolios through 2022 and beyond.
Data is as of March 17. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price.
Thereâs no doubt about it: Thinking about money can be a bit nerve-wracking. In fact, one recent study found that 90% of Americans say money impacts their stress level. If youâve ever swiped your debit card and seen âtransaction deniedâ or looked at your credit cardâs interest rate, you can probably relate to that. But […]
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If you have credit card debt, you may have wondered, what happens to credit card debt when you die? When you die, your credit card debt does not die with you. Rather, any remaining debt you have must be paid before assets are distributed to your heirs or surviving spouse. The debt is subtracted from […]
The post What Happens to Credit Card Debt When You Die? appeared first on SoFi.
It may not be a fun thing to think about or talk about, but itâs important to get your estate planning organized. Unfortunately, death doesnât just happen to other people. We should all get our affairs in order so that our loved ones can focus on grieving and moving on once we pass. Of course, […]
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Social media influencer, author, motivational speaker, and real estate investor Grant Cardone finally bought his Malibu dream home in 2022 – and itâs definitely worth the investment.
The post Grant Cardone’s Houses: A $40M ‘Castle on the Sand’ and a Wildly Colorful Main Residence in Florida appeared first on Fancy Pants Homes.