Each investor leans towards their own criteria and strategies to make their investments. However, we all share a common goal…getting our dollars to work for us in the best way possible.
Some investors focus more on cashflow while others focus more on appreciation, but we all want our $100 to turn into $110 and go up from there.
If you’re looking for a few ideas to give your portfolio an extra jolt, here are some tips that can help.
Growth oriented companies give you greater potential for accelerated returns. You can pick safer, blue-chip dividend stocks to reap in cashflow. However, if you are willing to take on some extra risk for a greater reward, growth stocks are a great choice.
You don’t have to buy a popular growth stock like Tesla just because everyone is talking about it. Although they’re not as easy to find nowadays, you can still find growth at a reasonable price.
My favorite metric to value growth stocks is the price-to-sales ratio which tells you how a stock is valued relative to its revenue. You can compare the P/S ratios of stocks within the same industry to find undervalued winners.
High flyers aren’t the only growth in town. Stable companies often get overlooked because they don’t produce mind boggling returns, but some of them have notable growth that doesn’t receive as much coverage.
Look for companies with growing revenue and earnings. That’s the primary target. Then, look at their valuations to make sure you are not overpaying.
People lose a lot of money by selling at the wrong time. When the stock market is bullish and charging upward, it’s easy to think the bullish momentum will last forever.
This mentality leaves many investors unprepared for a downturn. When their stocks suddenly decline 10%, 20%, or even 30%, many investors get jittery and end up panic selling.
Selling is seen as a way to escape the pain, but you’ll miss out if those same stocks go back up. Most people consider selling their stocks after considerable damage has been done. Few people sell at the top because the good times seem like they’ll last forever.
You don’t have to extensively trade options to get solid returns. A little bit here and there can make a big difference (I never put more than 0.5% of my portfolio into options).
If you’re worried about your favorite stocks declining, buy short-term protective puts instead of selling off your shares. This options trading strategy will protect you from panic selling.
You can sell covered calls and cash secured puts to turn more of your positions into cashflow generators and swing for the fences with the occasional call or put.
If you YOLO your money, you’re eventually going to lose it. That’s why you should only dedicate a small percentage of your portfolio towards options if you go this route.
The more stocks you come across, the more likely you are to find incredible opportunities. If you stop looking, you will miss something.
Looking for great stocks each day will help your portfolio. However, if you find that this practice gets in the way of growing and sustaining your income, you should scale back on this effort.
Looking at numerous stocks will give you a better understanding of which stocks you want in your portfolio and which ones you want to stay away from.
While it’s good to continue looking for opportunities, it’s just as important to build your existing positions. During a dip, you can buy additional shares of your favorite stocks. Since individual stocks dip at different times and at different intensities, you can load up on certain positions based on which stocks currently offer the best deal.
Growth stocks have taken a beating over the past few weeks with many of them offering more attractive entry points. Money I would put into my portfolio at this stage would go towards those growth stocks. A few weeks ago I invested more heavily into dividend stocks because growth stocks were trading at loftier valuations than they currently are.
Know which positions you’d like to build up, and buy the shares when you see an attractive entry point. Staying focused on your winners while continuing to look for future winners gives you a greater chance at outperforming the market.
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