With stocks down this year, you need income investments that will help pay the bills. Check out these income funds and all the ETFs on Global X, https://mystockmarketbasics.com/globalxETFs
In this video, I’ll show you how to find alternative income investments that trade just like stocks. I’ll show you what to look for and how to create a portfolio with as much as half the risk of stock, then reveal five easy income investments to watch right now!
Here what I’m looking for are assets and investments outside of stocks, so one is those investments backed by real things like MLPs with their pipelines, real estate investment trusts and infrastructure deals. I’m also looking for investments that may be like stocks but have other characteristics that lower the risk like preferred shares and options-hedged investments.
Looking for these in an exchange traded fund, an ETF, means you can buy or sell any of these just as easily as any stock. You don’t need tens of thousands for a down payment on real estate or accredited investor status that gets you in on private equity . That’s the power of these alternative income ETFs.
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All five income investment funds are beating the return on the Nasdaq so far this year. The Nasdaq is sitting at a 29% loss this year and I should have added the S&P 500 because it’s down more than 20% as well. Four of the income funds are down an average of 15%, about half the loss of the tech-heavy Nasdaq, and the MLP fund is actually up for the year, beating the market by more than 35%.
But more importantly, an equal-weighted portfolio of all five income investment ETFs is not only beating the Nasdaq by a long-shot but it’s done so on about half the volatility! As stocks in the Nasdaq jumped and crashed lower, taking your money and a good night’s sleep with it, the portfolio of income assets was a smoother ride.
In fact, the standard deviation, a measure of how volatile an investment or portfolio is, that volatility for the portfolio is just 15% on an annualized basis, less than half the 34% volatility of the Nasdaq QQQ fund.
So don’t underestimate the power of combining some of these types of alternative income investments into your portfolio to help you smooth out the stock market risk.
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Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through debt payoff strategies, investing and ways to save more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.