Part of having a strong retirement portfolio is to have diversified assets. Most financial advisers will put you into products such as bonds, equities and property to help boost your return by adding more risk and to diversify against single market crashes.
Bond and properties tend to be easier to pick as they are more stable and provide a stable dividend. Crashes also rarely happen. To pick a strong portfolio of stocks, there are a number of methods that you can deploy.
In addition, stocks can help you diversify geographically without the ownership issues that will arise from property investments as an example.
Buy an Exchange Traded Fund (ETF)
Exchange Traded Funds (ETFs) have become quite common these days as a method to diversify into equities with low volatility. However, the expectation for return is not high there as buying an ETF generally means you will buy all the good and bad companies regardless.
This sort of passive investing is useful for investors who don’t have the time or know how to individually invest in stocks.
In the US, there are thousands of ETFs which you can invest in, depending on your appetite.
For example, SPDR S&P500 ETF (SPY) lets you buy the top 500 companies in the US in one transaction. Another good ETF is the iShares Core U.S. Aggregate Bond ETF (AGG), which allows you to invest in a number of the largest bonds listed in the US.
For a list of US ETFs, you can check them out here.
Buy individual stock
There is something to be said about owning an individual stock. Individual stock gives you the opportunity to beat the market and will let you invest in something you believe in or a customer of.
Individual stock, or active investing, is better suited to those who have more time to do the research or is willing to pay for expert advice from a broker.
However, research doesn’t have to be expensive. There are quite a number of brokers that give free research which you can read for some stock investing tips. However, as with most things, you get what you pay for. Talking to the broker who published the research to see what a premium advice can give you will pay off in the long run. Quality advice is always worth the money.
There are a number of brokers who offer some free research and free tips.
Top stocks to buy
These brokers offer free research on what their top stocks to buy are across the world. Diversification, especially with single stocks is important as it reduces risk in your portfolio.
The other thing to look out for is the type of stock you are buying. There are high growth stocks, there are small-cap stocks and there are stable dividend type stocks. What you decide to buy in your portfolio will depend on the type of risk you can stomach in your portfolio.
US News Money – Some of the stocks they are recommending such as Amazon and Johnson and Johnson are blue chip US stocks that will survive market crashes in the future.
Morningstar UK – Morningstar UK recommends some large-cap undervalued stocks such as Roche Group and BT Group.
In Australia, MF & Co. Asset Management have come up with not one, but four lists that cover the best stocks to buy in Australia
Top 5 best shares to buy – The top 5 best shares to buy as recommended by MF & Co., these are the cream of the crop on the ASX, with a mix of growth and dividend type stocks.
Top 5 dividend stocks – These 5 stocks pay a strong dividend which will be suitable for investors with a lower risk appetite.
Top small cap stocks – These are high-risk stocks to buy which have a strong but speculative growth potential.
Top 5 high growth stocks to buy – These are high growth stocks with a proven product, so lower risk than small cap but still in early growth stages.
Picking the right stock to buy is not easy
Picking the right stock to buy requires research, knowledge and an understanding of the risks involved with investing. However, with some research and quality advice, it doesn’t have to as hard as it looks.