The old adage of working smart as opposed to hard is even more appropriate when peering through the financial “looking glass” towards 2017. With so many opportunities to enjoy profits through online trading, countless individuals are now appreciating the tools at their immediate disposal. However, some are not necessarily keen on completely diving into the markets. There are instead looking for solid strategies to build a passive source of income over time while mitigating any potential risks. What are some of the best methods utilised by experienced investors and how can they be employed during 2017?
Dividend-Paying Positions
Dividends have always been an excellent way to enjoy a strong and predictable return on a quarterly basis. The benefit here is that many blue-chip companies which pay these dividends are large enough to be able to supersede much of the volatility that is normally associated with small-cap firms. We must also not forget that these very same dividends are in addition to the forward momentum that a share may experience.
Determining Risk Tolerance
From a very general standpoint, those who are looking to generate passive wealth are not necessarily keen on becoming involved with risky positions. This is just as much of a psychological question as it is one of finances alone. The best way to gauge risk tolerance is to consider worst-case scenarios in regards to capital losses. How much can you afford to lose within a given position? This is normally the benchmark indicator of how much liquidity should be allocated towards a trade.
Diversification
Boats with many oars are able to negotiate even the highest of waves. A portfolio should be envisioned as a sailing vessel. In this case, the “oars” are individual positions across multiple sectors. A well-balanced portfolio can weather rough financial storms and the chances of an aggregate loss occurring are dramatically lessened. This is one of the underlying reasons why astute traders of all sizes opt for the spectrum of assets offered at CMC Markets. Some options here will include:
- Forex (currency)trades
- Commodities
- Indices
- Stocks
- Treasuries
Thanks to these choices, both low- and medium-risk positions can be embraced. Each will serve to help the investor rise above any financial “waves” that are likely to occur in 2017.
The Platform Itself
It is said that talent is partially defined by the tools that an individual uses. This is why smart investors employ equally smart and intuitive trading platforms. Trades need to be executed immediately. Access to late-breaking news is compulsory. Above all, numerous trading instruments should be available at all times when needed. These will all help to further enhance an existing strategy and with time, passive wealth generation can become a reality as opposed to a dream alone.
Looking Ahead with an Eye on the Past
To put this observation another way, the best means to enjoy passive income growth is to utilise cutting-edge trading tools while still embracing traditional and sound investment strategies. Whether this income is meant to supplement an existing salary or it will be put away to pay for the university education of a child, the fact of the matter is that there are more opportunities than ever before to enter into such a rewarding realm.
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