Stocks are not the safest place to bet on during an election year, with places like the S&P 500 seeing less than half their usual gains over such times. You need to look elsewhere, such as crypto or other investments, to maximize your absolute returns and secure long-term wealth for your family or business. So, to ensure you get the best returns, what are the key steps you need to take?
Read on to learn seven practical strategies to help you optimize your investment returns through, for example:
- Diversification
- Leveraging technology
- Risk management techniques
- Learning from experts
- Staying informed
So, discover the best financial growth tactics and learn capital appreciation methods to give you continued gains long into the future.
1. Maximize Absolute Returns by Diversifying Your Crypto Portfolio
Diversification means spreading out your investments over a broader range of asset classes. For example:
- Cryptocurrencies
- Commodities
- Bonds
- Equities
They can then spread even further, separating each class into further categories. For example, you can break cryptocurrencies down into:
- Large-cap
- Mid-cap
- Small-cap
On top of this, you can break it down further into all the different forms of individual cryptocurrency.
Make sure to balance whether you invest in more stable or high-risk assets. You can then capture growth opportunities that occur but minimize the potential downsides or risks inherent in any individual investment.
You will also need to evaluate your diversification efforts moving forward. Ensure they align with market conditions, as well as your own investment goals. You do not want them to fail to offer you what you want out of them due to a market change you did not realize occurred.
2. Use Advanced Technology in Portfolio Optimization
In the modern world, you can go further than a simple algorithm to offer you insights into various currencies. Harness the power of AI and machine learning, for example, to help you predict what the market will likely do moving forward.
Such technology enables you to make better decisions due to the mass amount of market insights they can make based on a long legacy of knowledge. They can determine when things will likely occur based on world events and market conditions and offer you insights into asset volatility and how much you should expect in returns.
3. Protect Your Portfolio With Risk Management Strategies
The market will never work precisely the way you expect it to. As such, develop an effective risk management strategy to prevent significant losses if unexpected events occur.
For example, set stop-loss orders in your software to automatically sell assets when prices drop below a specific level. Doing this can ensure that you always come out ahead if you have seen any growth by setting a clear price where you will not wait for it to drop further.
Combine this with a profit-taking order to sell when the investment hits a high point you set, and you don’t need to watch the price indefinitely. You can then adjust these numbers as the stocks fluctuate, keeping them in line with market performance and raising expected returns over time.
Another option is to use hedging, which involves trading in multiple derivatives of a similar asset. In the crypto world, this would include trading in one risky coin and a more stable one simultaneously so that you can take a risk while minimizing the potential for dramatic losses.
4. Leverage Tax-Efficient Investment Strategies
Try to craft your investment plan in such a way as to avoid tax liabilities and maximize the amount you get after cashing out. The best way to do this is to understand the limits of each tax bracket and try to adjust your gains to compensate.
So, for example, if you need to reduce your income suddenly, you can invest in an underperforming investment at a loss to bring yourself back under a target number.
Such a tactic is not always easy to predict, as you might not get as big of a loss as you would expect, but you can limit the amount you invest to prevent drastic losses.
Make sure that you consult a tax professional when you do this. Specific regulations may limit the companies you can invest in and prevent you from taking advantage of these rules to their full extent. As such, use strategies that keep you safe from repercussions.
5. Monitoring Emerging Market Trends
Ensure you understand all the trends occurring in the market at any time. You can use this data to optimize when and where you should be investing and thus avoid pitfalls due to a lack of information.
However, do not only use one source for this information. Look into options such as:
- Financial media
- Expert panels
- Analytics reports
- Online discussion boards
- Your network of peers
All of these may have information you would not otherwise be able to find.
6. Working With Crypto Fund Managers to Improve Your Performance
You cannot keep up with all the information you will need to know yourself. A crypto fund manager can thus:
- Offer new market insights
- Discuss and implement strategies
- Allow access to advanced tools and resources for investing
- Provide risk management expertise
- Handle your portfolio during downtime
- Advise on new or unique market segments
Work with a professional to give you the high-quality insights you need and to act on them when you’re not available.
7. Stay Ahead by Continuously Embracing Cryptocurrency Trends
Cryptocurrency is still a new technology but is evolving all the time. Engage online with thought leaders or crypto communities who can help you understand the market’s future. You can then leverage these support networks to help you improve via:
- Workshops
- Conferences
- Seminars
- Blogs
- Social media feeds
- In-person discussions
There are countless ways to leverage a professional network. So, utilize these resources and give yourself the best chance of success.
Appreciate a New Era of Investment
The above tips may help you position your portfolio to have the best chance of seeing even bigger absolute returns. However, as crypto evolves, you will continue to need the knowledge to stay ahead of the curve.
TrueCode Capital offers a cryptocurrency hedge fund to take all the guesswork out of investment. We have the technology, experience, and insights to get you where you need to be. Contact us to learn more about how we can shine a new light on your portfolio today.
