When you are working in the C-suite, you make an above-average salary. This allows you to more conveniently plan your financial future. On the other hand, you will not stay in the C-suite forever. How do you deal with your long-term strategy when it comes to your finances? There are many ways you could approach this concept. In this article, we explain strategies you can execute to ensure financial freedom for generations to come.
Diversification is key: like for any investor
What becomes evident when looking at the long-term return of indexes, you can see that it is very hard to outcompete the market. How will you be able to do so? While there might be very smart hedge fund managers and financial advisors out there, many cannot deliver upon their promises. If you are aiming for a long-term investment strategy, make sure to diversify.
Foundation of index funds
A portfolio should therefore consist of a strong foundation in index funds. There are many options out there, with the Vanguard S&P 500 and iShares Core being among the famous ones. Percentages of allocation differ per portfolio, but we do recommend keeping about 40% of your holdings in these world-covering funds.
‘World’ and ‘emerging market’ funds
Another rule of thumb is the 80-20 division between a world index fund and emerging markets. A majority of the funds are allocated to the world (i.e., mostly US and other western companies) and 20% is allocated to emerging markets. This allows you to stay on top of the game, also when wealth divisions across the globe change.
Real estate can be a strong investment
Real estate is mentioned very often in articles concerning investing. However, one should be very careful when it comes to investing in real estate. It comes with a lot of hassle, and should not be underestimated. This especially holds for holiday homes and the like.
Go for REITs
To move effectively in the real-estate domain, it makes sense to invest in Real Estate Investment Trusts (REITs). These are pools of mortgages and real-estate investments that provide a high yield. Next to that, you do not have any of the worries that you would have from your real estate. It is also more diversified, as the real estate is located across the United States and/or across (parts of) the world.
Add some risk to your portfolio: cryptocurrencies
With high earnings, you can take more risks. We, therefore, recommend investing in more risky investments such as cryptocurrencies. These cryptos can come with unimaginable returns and should be a part of any modern-day investor. To make sure you are not overexposed, do not increase the presence of crypto to over 10% of your total holdings. Diversify and focus on the top-20 currencies out there. This makes sure you avoid being part of the more obscure coins in the crypto space.
Tracking your portfolio
Technology has also advanced in the financial domain. With a stock tracker, you can easily have an overview of all your holdings. These applications allow you to directly integrate with your broker to have a real-time overview.
Be careful with a stock tracker
A stock tracker is a beautiful invention that allows you to combine your index funds with REITs, crypto, and more. However, it can also lead to over responding to market changes. For example, if you see daily fluctuations you are more likely to trade on them. Therefore, you should leverage the push notification of a portfolio tracker. You can set these notifications to only pop up with important market news and fluctuations.
