5. Invest More Aggressively
Finally, one way to increase the return, at least the expected long-term return, of your portfolio is to take on more risk. That generally means placing less of the portfolio in safe but low-returning investments like cash, CDs, or bonds and more of the portfolio into riskier but higher-returning assets like stocks and real estate. Changing a portfolio from 50 percent stocks/50 percent bonds to 80 percent stocks/20 percent bonds has historically increased return by approximately 1.2 percent per year. Bear in mind that change also increases the frequency and magnitude of portfolio losses, so don’t take on more risk than you can practically and emotionally handle.
Explore This IssueACEP Now: Vol 38 – No 04 – April 2019
If your investment return is too low to reach your financial goals, consider these steps to increase your return. If you combine them with a higher savings rate, you may be surprised just how quickly you can build wealth.