Wed Nov 20 2024, by Tyler Gardner

Three Creative Strategies to Gain an Edge as a DIY Investor

Hi, I’m Tyler, a former financial advisor and portfolio manager. I create financial content for free so that you don't have to pay for it. Here are three creative ways to give yourself a potential edge as a DIY investor.

1. Invest in Small Cap Companies

Instead of investing only in large-cap companies like those in the S&P 500, consider adding a 5% holding in small-cap companies like those in the Russell 2000. From 1926 through 2020, small caps demonstrated an average annual return of 11.9% compared to large caps at 10.3%.

2. Explore Investment Grade Corporate Bonds

Rather than investing solely in government bonds, think about including a 5% holding in investment grade corporate bonds. Over the same period, government bonds yielded an annual return of 5.7% versus 5.9% for corporate bonds. If you consider corporate bonds risky, just remember the current US national debt.

3. Diversify Internationally with Emerging Markets

Instead of limiting yourself to US domestic markets, try incorporating a 5% holding that tracks the MSCI Emerging Markets Index. This gives you direct exposure to countries like China, India, and Brazil. During the lost decade from 2000 to 2010, emerging markets returned over 150% versus the S&P’s 0%.

Remember, past performance is never indicative of future results. If you found this helpful, please like and follow, and I’ll keep working to help you get one step closer to your investment goals!

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