With the stock market continuing to experience volatility in 2020, many investors have turned to online communities like Reddit to find the best advanced investing strategies. Reddit forums like r/investing provide a wealth of recommendations from experienced investors on strategies across asset classes. In this article, we will explore some of the top advanced investing strategies discussed on Reddit in 2020.
Diversification across asset classes
Many Reddit posts emphasize the importance of diversification across asset classes like stocks, bonds, real estate, and alternative investments to manage risk. Some popular recommendations include a core-satellite approach with broad market index funds as the core and 10-20% in higher risk/higher reward asset classes.
Factor investing strategies
Factor-based investing strategies that target aspects like value, momentum, quality, and low volatility are frequently mentioned on Reddit threads. These rules-based quantitative methods can provide excess returns over the long run. Some suggested implementations are multi-factor ETFs and algorithms.
Effective portfolio rebalancing
Rebalancing one’s portfolio periodically back to target allocations is vital for risk management according to many Reddit posts. This forces investors to buy low and sell high. Posts suggest rebalancing 1-4 times a year or when allocations drift 5-10% from targets.
Tax-efficient placement of assets
Reddit discussions highlight locating assets tax-efficiently across retirement and taxable accounts. For example, high dividend stocks and bonds suited for regular income go in retirement accounts while capital gains oriented assets like broad equity index funds are better in taxable accounts.
Using retirement accounts effectively
Many Reddit threads advise fully utilizing tax-advantaged retirement accounts before taxable accounts. This includes maxing out contributions to 401ks and IRAs and using strategies like Roth conversion ladders. Others warn about early withdrawal penalties and advocate building accessible savings before locking money away.
In 2020, Reddit investors recommended diversification, factor investing, rebalancing, tax efficiency, and retirement account optimization as some of the best advanced strategies for managing market volatility and improving returns.