Building wealth used to be a rich man’s game. Economic pullbacks and wild market swings, in particular, were always marked by steep losses for most individuals …while the rich used their vast resources and networks to just keep getting richer.
In the 21st century, the issue of accessing these elite opportunities is quickly becoming a non-issue. Investors of all stripes can use the internet and a wide variety of tech tools to access endless investment opportunities.
Some of these fluctuate wildly, like cryptocurrency and NFTs. However, there are many ways that investors can also use these new tools as a way to create some stable growth for their portfolios — even when things are anything but certain. Here are a few ways the everyman and everywoman investor can build wealth, even in the current volatile economy.
Table of Contents
1. Ground Unstable Investments
A volatile market is anything but fair. No matter how much experts try to predict trends, some areas of a market will be impacted more than others. Cutting-edge investments, like tech startups, can crash harder than established enterprises as they lose critical seed money required to scale their operations. Cryptocurrency is even worse, as a spooked market can trigger massive sell-offs that cause digital currencies to collapse in a matter of days or even hours.
One of the best ways investors can keep their portfolios steady and avoid losses from these wild swings is by tethering their alternative or unstable investments to more dependable options. Often this requires some creativity.
For instance, those concerned about bottoming out cryptocurrency prices can make a move to shift their investments into tokenized real estate. This is the mindset that RedSwan has used for its revolutionary tokenized CRE platform.
The cryptocurrency-based investment tool allows investors to purchase tokenized shares of CRE (commercial real estate) properties.. This, in effect, lets them transition their assets from unstable tokenized digital currencies into a similar format that is tethered to the very real and steady world of real estate.
The marriage of tokenization and real estate is a unique and clever way to build wealth. It allows investors to invest in large-scale commercial enterprises with plenty of potential for wealth generation. At the same time, the very brick-and-mortar nature of the investment means it can weather the ups and downs of a shaky market.
2. Always Buy the Company …Not an Idea or a Stock
Investing during a market dip can be profitable — if you put your money in places with a high probability of rebounding when things improve. The key to doing this is to find real companies with genuine potential. In other words, don’t buy an idea or even a hot stock. Always buy the company itself.
The simplest example of this is investing in stocks, especially when a volatile market means prices are constantly shifting. If you’re considering buying a stock, stop and ask the question: Are you buying into the stock itself or the company behind it?
Here are three questions to ask after researching a potential company before buying its stock:
- Is the company an honest organization with a reputation for being ethical?
- Is the company built on a high-quality concept that is unique and answers a genuine consumer need that will continue for an extended period of time?
- Is the company executing its vision effectively?
The answers to these questions are important. Buying a stock because it’s trending is dangerous and timing the market is infamously difficult. However, if you study a company and, after extensive research, find that it’s a high-caliber organization, you can buy its stock (ideally at a low point in a volatile market) and hold with confidence.
This is the investment philosophy that has long guided popular investment companies like Motley Fool. Creating steady, thoughtful investments during stock market lows is a great way to sow the seeds for incredible future growth.
3. Consider Solidifying Your Profits Sooner
Remember, until you cash out of an investment, its profitability remains potential rather than reality. Of course, to facilitate the latter, you must invest in the former. You need to find stocks, companies, real estate, and other assets that promise growth to sell at a profit in the future.
Even so, in a volatile economy, it’s important to consider the value of selling at the right time. To be clear, this isn’t advice to sell everything when your investments are down. On the contrary, always think twice before selling at a loss.
However, you may want to alter your selling strategy during unstable times. The advisors at Schwab recommend considering taking at least some profits in volatile markets. The investment gurus at the financial powerhouse point out that when things are unstable, profits can quickly turn into a loss.
As a precautionary measure, it can be a good idea to solidify some of your gains as a proactive way to lock in your current profits, even if they aren’t quite where you want them to be. You can leave some of your investments to continue running, but establishing real, tangible profits can introduce a stable form of real-world wealth, even when profit and loss calculations run wild every other day.
It can be hard to maintain a stable portfolio (let alone build wealth) when markets are touchy. And yet, things like inflationary pressure, the threat of a recession, and ongoing supply chain woes continue to remain major factors for investors daily.
In response, it’s important to not just look for stable investments. You need to find ways to continue to keep your wealth moving in an upward trajectory. Take some profits. Invest in healthy businesses with bright futures. Ground your unstable investments when possible. That way, you can continue to stay positive and profitable, even in a volatile market.