The Low-Stress Investors Hack to Wealth Building
If you are like us, you want less stress in your life, not more. Finances are the number one source of stress in people’s lives after their relationships, and we can’t help with those unfortunately. But good luck.
What we can help with is the finance part.
If you are reading this then you probably:
- Don’t want to be constantly checking your investment portfolio
- Don’t want to feel stressed out about market fluctuations
- Do want to build wealth without dedicating all your time and energy to investing
- Do want the convenience of a ‘set it and forget it approaches to building wealth
- Do want to spend your time going for park runs, learning to cook bouillabaisse, or skydiving? Anything that’s not staring at spreadsheets and spending hours reading reports on the economy trying to work out what to do with your money.
The good news for you is that there is a low-stress way to build wealth that doesn’t require you to constantly monitor your investments or make emotional decisions based on short-term market movements. In this piece, we’ll share the low-stress investors’ hack to wealth building. We’ll cover the benefits of a long-term investment plan, diversification, alternative assets, and more.
Alright, so let’s get into learning how to build wealth without all the stress and anxiety that often comes with investing.
Low-Stress Long-Term Investment Plan
With a long-term investment plan, you can set yourself up for success and build wealth over time without the stress and anxiety that often comes with ongoing decision-making, buying, selling, and trying to gauge market timing.
The number one most popular approach to a successful and stress-free long-term investment plan is to adopt a ‘set it and forget it’ strategy. By selecting a diversified portfolio of assets and then simply holding onto those assets for an extended period, typically several years or more, you can potentially see significant returns while avoiding the stress and emotional decision-making that can come with more active investment strategies.
One of the primary benefits of a long-term investment plan is that it allows you to take a disciplined approach to invest. Rather than making emotional decisions based on short-term market fluctuations, you can focus on your long-term investment goals and stay committed to your investment strategy.
The Power of Set It and Forget It
By adopting a ‘set it and forget it’ approach, you can avoid the temptation to make frequent adjustments to your portfolio in response to market movements. You really want to avoid frequent adjustments if at all possible because data shows time and time again that attempting to ‘time the market’ leads to lower returns and higher fees.
If you can create a portfolio allocation that you are happy with and then leave it alone as much as possible, not only will this be much more relaxed and labor-free for you, but it is also correlated with higher returns and fewer fees. Set it and forget it is probably one of the single most powerful hacks for low-stress investing.
Another advantage of a ‘set it and forget investment system is that it requires a lot less of your time and effort compared to more active investment strategies. When you have a long-term investment plan in place, you can sit back and let the market do the work for you. This is a particularly great option if you’re busy and don’t have the time to actively manage your investments. We don’t remember the last time we met someone who was not busy.
When you focus on a long-term investment plan and adopt a ‘set it and forget it’ investment system, you can potentially reduce the stress and anxiety associated with investing. Rather than constantly monitoring your investments and worrying about short-term market movements, you can focus on your long-term investment goals and trust that your portfolio is working for you. This can help improve your overall quality of life and reduce the negative impact that investing-related stress can have on your mental and physical health.
A simple, long-term plan means a reduced time commitment, and it can help you avoid making impulsive or emotional decisions based on short-term market fluctuations. This is good news for your psychological state and good news for your wealth.
Diversify to Reduce Stress
A core component of low-stress investing is diversification. Diversification is key to reducing stress because when you invest in a range of asset classes, you can potentially offset losses in one area with gains in another. This can help smooth out the ups and downs of the market and potentially improve your overall investment performance, as well as your state of mind.
One area of diversification that is often overlooked by investors is alternative assets. Alternative assets include investments such as private equity, real estate, hedge funds, commodities, and merchant cash advances. The reason alternative assets can be such a powerful addition to your portfolio is that they typically have low correlations with traditional investments like stocks and bonds. There are major stress-relieving components to this because when stocks are diving, alternative assets can continue to appreciate and grow in value.
Including a 20% allocation to alternative assets within your overall portfolio can help bolster the diversification power of your portfolio and potentially reduce your overall exposure to risk. Less risk = less stress.
Another benefit of diversifying into alternative assets is that they also offer the potential for higher returns compared to traditional investments. For example, our 24-month pays you targeted regular remittances every three months, as well as targeting a hugely competitive 12%. This is a significantly higher target rate than other forms of short and medium-term notes available on the market, and it’s because we specialize in alternative assets that we are able to offer such high target rates.
As you can see, diversification using alternative assets can be a powerful tool in your low-stress wealth-building kit. By investing in a range of asset classes, including alternative assets, you can potentially reduce risk, increase potential returns, and achieve your long-term investment goals. So far, so excellent.
Alternative Assets for Low-Stress Wealth Building
Alternative assets deserve a section of their own just because they offer unique benefits that other types of assets don’t.
First of all, calling these asset classes “alternative” doesn’t do justice to the significance of alternative investments in the economy today. More and more, institutional investors and private investors alike are turning to alternative assets not only to risk-adjust their stock spread but sometimes to replace them altogether. The Yale Endowment and the Canada Pension Plan Investment Board, for example, both have nearly 50% of their assets allocated to alternative investments.
Ok so, you already know that when you allocate a portion of your portfolio to alternative assets, you can potentially achieve greater diversification and reduce risk, but how much should that portion be for you?
Experts tend to recommend roughly a 20% allocation of alternative assets in an overall balanced portfolio, but the exact amount will depend on your personal risk appetite and the timeline you are working with. As we have already covered, some investors see the value in alternatives being so high that they allocate as much as 50% of their portfolios.
To get you started in thinking about what you want your own personal alternative asset allocation to be, here are some of the reasons that high-performance institutional investors like Yale love them so much:
- Reduced volatility: It’s worth repeating because it has such a huge impact on reducing your stress. Alternative assets often have low correlations with traditional investments such as stocks and bonds. This means that when the stock market is down, your alternative investments may hold their value or even increase in value, helping to offset any losses in your traditional investments. This can help reduce volatility in your portfolio, potentially leading to a more stable and stress-free investment experience.
- Potential for higher returns: Alternative assets can offer the potential for higher returns compared to traditional investments. You may have read that the 60/40 portfolio is dead. Well, alts are increasingly being used to replace stocks and aim for higher returns – like Yale Endowment and Canada Pensions. By allocating a portion of your portfolio to these types of investments, you can potentially increase your overall investment returns and build wealth more quickly.
- Diversification: We know we keep saying it, but diversification is key to reducing risk in your portfolio and alternative assets are excellent at helping you to do just this. By investing in a range of asset classes, including alternative assets, you can potentially reduce the risk of your portfolio and achieve more stable returns over the long term. And of course, stability is great for reducing the stress and anxiety associated with investing.
- Hedge against inflation: Some alternative assets can provide a valuable hedge against inflation. Inflation can erode the value of traditional investments like stocks and bonds – as we have all seen recently. By allocating a portion of your portfolio to alternative assets, you can potentially protect your portfolio from the negative effects of inflation. A major stress saver.
- Emotional detachment: Most of the time, alternative assets are less liquid than traditional investments, which can help you to emotionally detach from short-term market movements. When you invest in assets that require a longer-term commitment, you might be less likely to make impulsive or emotional investment decisions based on short-term market fluctuations because you know you are going to hold them for 12, 24, 36, and 120 months. You get the idea. Again, this is good for you and good for your wealth.
Alright, so we have analyzed in detail how including alternative assets in your investment portfolio can provide you with several important benefits including reduced volatility, the potential for higher returns, diversification, protection against inflation, and emotional detachment. All of these qualities can help to ensure the lowest levels of stress possible in your wealth-building future so they are really worth taking into consideration.
As always, it’s important to carefully evaluate alternative investments and your overall strategy and timeline. By adopting a stress-free wealth-building strategy that includes alternative assets, you can potentially achieve your investment objectives while enjoying a more relaxed investment experience.
Why Experts Support the Set it and Forget it Method
We have done our best throughout this article to marshall evidence that shows why a well-diversified portfolio, including alternative assets, created to run on a ‘set it and forget it’ regime is likely to bring you a pleasant, hands-free, low-stress wealth-building experience.
But, ultimately, you don’t have to take our word for it.
You can listen to Benjamin Graham, an American economist, investor, and author who is widely regarded as the ‘father of value investing’. Benjamin Graham said:
“The investor’s chief problem—and even his worst enemy—is likely to be himself.”
What Graham was referencing here is our tendency to overestimate our ability to understand, synthesize, and predict the market. Graham was a firm advocate for the ‘set it and forget it’ method because it designs out our human tendency to think that we know more than we do.
By deciding on a risk appetite and timeline, you can set up regular recurring investment deposits and then let your investment system run itself. This means much less margin for snap decisions, emotional reactions to market environments, and choices made with incomplete data. It means less stress and more time and energy for other things that make life good.
We hope that was helpful. If you want to take advantage of our own set-it-and-forget-it alternative asset products, we have options for you. You can get started here.