It has been quite an interesting 2 weeks going through my usual daily market news and conversations with friends about the market. The one thing I enjoy looking at when choosing the stocks to enter is companies with physical assets.
To me being able to use my 5 senses in investing is important even in this time and day. The difference between investing blindly via looking at stock indexes and values is the physical products. With the evolution of time and market trends, everyone needs something physical to get by – be it food or groceries or commodities. Despite that, I would usually look into buying ETFs – passive tracking; REITS – for recurring income; and Blue Chips – for active growth.
When we look at ETFs, we look at them similarly to how we look at Unit Trusts. They track the market in a similar yet different way. ETFs are passively managed; while Unit Trusts are actively managed. Both are managed by fund manager – the exception is the action taken. ETFs are required to follow closely the underlying index; while Unit Trusts follows what the fund manager picks – hence the different in management fees.
REITs is another kind of asset class – they are asset backed investment similar to buying Real Estate. Except that you pool money together to buy into real assets, get a manager to rent out the assets and run the business while you get rental income in the form of dividends – less tax and management fees. It is an indirect way of owning assets and collecting rent – without much of a headache managing tenants. It also deals lesser risk – except maybe during market downtown or industrial disruptions depending on the underlying asset class the REITs is servicing.
The last group of asset which I look at is Blue Chips. These are the evergreen classification of stocks that belong to the class of commodities or essential good and services. Most of them are usually tracked on the index funds. They may provide a lower rate of return compared to the REITs or ETFs, but it provides a potential for growth and stability.
What is next?
When it comes to investing, the rule of thumb is not to throw everything into the same basket but diversity and spread them out. Hence, this is one method to spread it out – but not too thinly. There are many bloggers out there whom shares their passive income portfolio earning returns in the thousands. So everyone begins somewhere, and taking the first step is not that difficult, you can begin somewhere by opening a brokerage account or an investment account with the bank and start keeping aside $100 a month or more – that is where the journey begins.