The TSX today is at an all-time high. It hasn’t been more critical to buy where value is than it is now. Buying where assets are trading cheaply will help boost your returns in the long run. No one says this is easy, though. Investors must endure volatility (or ignore it altogether).
Maintaining a diversified portfolio will be of the utmost useful because assets from different industries and sectors tend to take turns rising and falling.
Here’s how you might get peace and outperforming returns from a diversified portfolio. First, let’s take a look at where value is in the stock market.
Image source: Getty Images
Find value in Bitcoin and crypto in general
If you’re maintaining a diversified investment portfolio, investing in cryptocurrency is a part of that equation. With the leading crypto, Bitcoin, down more than 40% from its US$63,300 peak to the US$36,000 level, it’s a good time to buy some. Ark Investment’s founder and CEO, Cathie Wood, believes Bitcoin can rise to US$500,000, which would suggest a 13-bagger.
If you think that’s an outrageous target, assuming the crypto returns to its previous peak, that would still be a roughly 75% gain, which is nothing to sneeze at.
If you still believe in the future of Bitcoin, you can easily invest in shares of Purpose Bitcoin ETF (TSX: BTCC.B) that is just like buying and selling stocks. There’s no need for digital wallets, keys, or converting to fiat currencies. In other words, it’s hassle-free to invest in the Bitcoin ETF.
Purpose Bitcoin ETF explains that “When you buy the ETF, we buy real Bitcoin with your money. By holding this ETF, you hold actual Bitcoin in your portfolio.”
If you prefer something more diversified, you might consider investing in a crypto industry exchange-traded fund (ETF) such as Bitwise Crypto Industry Innovators ETF.
The ETF offers a diversified and passive way to invest in the potentially disruptive crypto industry without the challenges of holding cryptocurrencies directly. The ETF has been less volatile than Bitcoin, Ethereum, and Dogecoin.
BITQ aims to track the Bitwise Crypto Industry Innovators 30 Index that is designed to capture companies engaged in actual, material activity in the crypto sector.
The Foolish takeaway
Bitcoin and the crypto industry should be a small part of one’s diversified portfolio. Together with gold assets, crypto might make up to 10% of your portfolio. It’s a good idea to allocate your capital slowly by buying systematically on this crypto dip.
The remaining 90% might be in solid stocks in other sectors, including technology, healthcare, utilities, financial services, consumer staples, consumer discretionary, industries, communication services, real estate, etc. For example, you might have Amazon, Alphabet, BMO, Home Depot, Emera, TELUS, Alimentation Couche-Tard, H&R REIT, etc. You could also throw in some smaller stocks like Savaria and Tecsys that could deliver incredible long-term growth.
By maintaining a well-balanced, diversified portfolio is how you might sleep well at night and generate market-beating returns for the long haul.
Aim to buy stocks when they’re cheap. Each stock plays a part in your portfolio. Sometimes, you’ve got to trim them if they grow too big. The rule of thumb is to ensure one sector doesn’t take up more than 25% of your portfolio. You can consider rebalancing your portfolio annually.
