3 Expert Tips to Maximize Your Investment Gains, Even in Tough Times

If you’re fearful about the future of the market, consider these options that can help you maximize your returns in 2024 and beyond.

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Today, we’re going to go beyond the basics. Instead of going over the obvious recommendations of creating a diverse portfolio with a focus on long-term investing, I’m going to assume you already know that.

Instead, we’re going to dive deeper into strategies that could supersize your investment portfolio. Even during touch times. In fact, it could be argued that’s especially possible during tough times. So, herewith are three strategies investors could consider for their portfolio.

Be a contrarian

During market downturns, investors tend to be pessimistic and this can lead to undervalued investment opportunities. Therefore, it can be really beneficial to look for contrarian opportunities by identifying sectors or companies that are temporarily out of favour.

The key is the word “temporarily.” You’ll also need to identify companies that also have long-term prospects. These companies after thorough fundamental analysis distinguish themselves beyond a temporary setback, and instead offer underlying value. Then, consider taking advantage of discounted prices to build a position in the quality assets as they recover.

A great example would be Brookfield Renewable Partners LP (TSX:BEP.UN). This diversified, global renewable energy stock has seen its share price drop from higher costs and interest rates. Yet it’s a financially sound stock that is due to rise once the market and economy even out as well. And with a 6.14% dividend yield, it certainly offers something to today’s investor.

Alternative assets

Another method is rather than focusing on the future, think about opportunities in the present. Alternative assets can provide both diversification and potential downside protection during tough times. These often have low correlation to traditional financial markets.

Consider allocating part of your portfolio to these alternative assets. Some might include infrastructure, commodities, or even private equity. These can provide you with a hedge against market fluctuations. And one area I particularly like is insurance.

A strong investment then to consider would be Fairfax Financial Holdings (TSX:FFH). This company offers a strong revenue stream from its underwriting service for property and casualty insurance. However, it’s also run by Prem Watsa, a well-known investment mogul known for his value investing. So certainly consider this stock as well for protection during tough times.

Consider options strategies

Another way to manage risk and enhance returns is to consider options strategies. Especially when the market is quite volatile. Explore options strategies such as covered calls, or protective puts to generate income or protect yourself from downside risk in your investment portfolio.

Covered calls involve selling call options on stocks you already own. This can potentially generate more income from premiums while limiting your upside potential. Protective puts, on the other hand, provide insurance against a decline in the value of your portfolio. They give you the right to sell an asset at a predetermined price.

However, options trading can be complex and of course risky. So make sure you have a thorough understanding of both the market and these options. And as always, consult your financial advisor before taking on any of these strategies.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has positions in Brookfield Renewable Partners. The Motley Fool has positions in and recommends Fairfax Financial. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.

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