During hard times, economic crisis and unstable markets it is a good
idea to diversify your stocks or bonds portfolio. But people are asking
what other diversifying options beyond stocks, bonds or commodities are
out there. Before I explain the idea of auto copying best currency
(forex) traders, let´s see what more classical diversification options
you have for investing in 2013 and beyond.
REITs – Real estate investment trusts can provide you a stream of income as well property ownership.
Master Limited Partnerships – MLPs are mainly involved in the oil and natural gas pipeline business.
Preferred Stock – This is a hybrid security. It offers
dividend payments and also limited voting rights, but is sensitive to
interest rates and so you should monitor it for credit quality.
Annuities – These are contracts that will bring you an
income stream over a certain period of time. They have an advantage that
they can guarantee you a minimum level of return.
Precious Metals – Gold’s value is historically
correlated to currency valuations over long periods of time. Over
shorter periods, it is influenced by shifts in sentiment. If you do not
wish to bother with buying physical metals, consider investing in ETF.
Commodities – A basket of well chosen commodities, like
precious metals, energy (e.g., oil) or agricultural goods (e.g., wheat)
provides a hedge against inflation. It also lowers the volatility of
your portfolio holding only stocks.
Currencies – Foreign currencies can help protect your portfolio
against fluctuations in the U.S. dollar. But they can also be used for a
long or short term trading. Forex market is huge with billions of
dollars traded on a daily basis. Traders are able to profit when markets
go up (long positions) but also when markets go down (short positions)
and thanks to a use of leverage their profits can be very lucrative
compared to other investment vehicles. But trading on your own can be
very hard and risky if you do not know what you are doing.
And here comes your diversifying opportunity for 2013 and beyond. If
you simply do not know how to trade currencies or you do not have time
to do that you can take advantage of fast growing and popular forex
social investing networks. They allow you to create your own portfolio
of best forex traders and auto copy their trades on your trading
account.
One of the largest forex social investment networks is Zulutrade.
This company was founded in 2006 and created bridge between forex
traders (signal providers) and followers (people who copy other
traders). There are thousands of signal providers you can choose from by
different criteria like: overall profit, average pips/trade, maximum
drawdown, number of open trades, minimum necessary equity, win% , number
of followers and more. Each trader has detailed statistics that will
tell you more about his trading style, strategy, risk and money
management. Zulutrade uses advanced formula to rank all signal
providers. Visit Zulu ranking to see best performing forex traders.
As this article is about diversification, I encourage you to check
our other article published lately. It is about managing your risk by
diversifying your investment by auto copying more than one signal provider.
It can be an eye opening reading that will show you how you can acheive
returns like 300% p.a. while your risk can be very low.
