“Beginning investors should make sure that they aren’t always following the herd mentality,” says Todd Burkhalter, CEO of Drive Planning, a financial consulting firm based in Georgia. Aside from the standard lineup of stock and bond funds, young investors, he says, should consider holdings like private placement investments in real estate and energy industries – things that aren’t so common.
That kind of advice relies on the fact that young investors can afford more risk than older ones since they have more time to recover from downturns.
Young investors who grew up doing things online may be wise to consider equity crowdfunding sites such as Realtyshares.com that allow users to invest in out-of-the-mainstream private ventures like house flipping projects, and start-ups, some experts say.
Thanks to new rules that took effect in May 2016, anyone (not just high income investors) can invest in non-public companies in exchange for equity.
“Portfolio diversification is important, especially investing into asset classes beyond publicly-traded equities,” says Chris Rawley, CEO of Harvest Returns, an online platform for investing in agriculture. “Multiple streams of income produced by assets that are not correlated with the stock market are important to reduce risk in a portfolio.
“Crowdfunding platforms make it possible for new investors with smaller investment balances — as low as $100, or even $10 — to diversify into real estate, farmland, and other tangible assets that produce a steady yield.”