In this episode of Money Talk With Tiff, host Tiffany Grant dives deep into advanced investment strategies tailored for experienced investors looking to diversify and enhance their portfolios. From options trading and short selling to margin trading and hedge funds, Tiffany breaks down complex strategies, their benefits, and associated risks.

She also provides actionable tips for listeners aiming to integrate these strategies into their investment plans. If you've mastered the basics and are ready for the next level, this episode is a must-listen!

Check out the full show notes: https://moneytalkwitht.com/investing/advanced-investment-strategies/

Key Takeaways

Options Trading

• Definition: Investors gain the right, but not the obligation, to buy or sell an asset at a predetermined price before a specific date.
• Benefits: Offers leverage and flexibility, enhances returns, and manages risk.
• Risks: Complex to learn, volatile with potential for significant losses.
• Tip: Gain a solid understanding and use it as part of a diversified strategy.
• Episode on options: https://moneytalkwitht.com/podcast/introduction-to-options-trading-unpacking-the-basics-with-jason-brown-ep-264/

Short Selling

• Definition: Selling borrowed stocks with the intention of buying them back at a lower price.
• Benefits: Potential to profit in a falling market, serves as a hedge against other portfolio risks.
• Risks: Unlimited loss potential if the stock price rises, requires precise market timing and insight.
• Tip: Use cautiously and pair with other risk management techniques.
• Interactive Learning: Tiffany may reintroduce the stock market challenges, providing a risk-free way to practice these strategies.

Margin Trading

• Definition: Trading with borrowed funds to increase the size of a position.
• Benefits: Enhances purchasing power and potential returns.
• Risks: Magnified losses, margin calls may force sales at unfavorable times.
• Tip: Only for those with high-risk tolerance and solid risk management plans.

Hedge Funds

• Definition: Pooled investment vehicles that use various strategies to earn active returns.
• Benefits: Access to sophisticated strategies and professional management, potential for high returns.
• Risks: High fees, less liquidity, complex and sometimes opaque strategies.
• Tip: Thoroughly research hedge funds and managers, align investments with goals and risk tolerance.

Resources Mentioned

• Episode featuring Options Expert
• Accredited Investor episode link

Got a question for Tiffany? Visit Ask Tiffany to submit your money inquiries, and potentially have them featured in an upcoming episode!

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• Social Media: @MoneyTalkWithT on all platforms

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You know what it is. That's right. It's time to talk money with your money

nerd and financial coach. Now tighten those purse strings

and open those ears. It's the Money Talk with Tiff

podcast. Hey,

hey, hey. And welcome to another episode of Tiffany's Take, where I answer

your money questions right here on the podcast. So if you want your question answered,

go to moneytalkwitht.com Ask

Tiffany, and I'll be more than happy to answer for you. There is an option

on there for you to record your voice, which I'll. I would love to hear

you all's lovely voices. So if you are brave enough,

please, please, please make sure you send those, those

over to me. But for the purposes of this episode, you

all love this investment thing, so we're going to keep this investment train going.

Someone asks, well, Tiffany, I heard the other episodes and

that all sounds great, but I'm already an experienced

investor. I already know this stuff. What are some things that I can do?

And so I was like, you know what? Let me do an episode on some

advanced investment strategies. So this is for people that

are already investing in stuff. They're already, you

know, in stocks, bonds, you know, whatever it is that they decided to do.

And now they're looking for other ways to diversify

their portfolios. And so I'll go over

what these options are. Some benefits to them, some risk to

them, and maybe just a quick tip for each. All right? So first

and foremost, there's options trading. So options options give the investors

the right, but not the obligation to buy or sell an asset at a

predetermined price before a specific date. So

if you already have individual stocks,

let's say you already have Apple, right? You have one share of

Apple. You can allow someone

the option to buy or sell

your asset at a predetermined price.

So at a price that you charge, if that makes sense.

So this strategy can be used to hedge against potential losses or

speculate on price movements. If you know that,

let's say Apple's gonna go down, you can give somebody the

option to sell the Apple, but you

still make money on top of that. So the benefits to

this is it offers leverage and flexibility. You can enhance your

returns and manage your risk. Some risks to this,

it is complex to learn. You have to know what calls are, what

puts are, what options are like. It's

very complex. I remember I learned this when I was in my

master's program in my investing class, and it was giving me a

headache. I had to really sit down and wrap my mind

around how it all works. I get it now. But it is

very complex and it's also volatile. So there's a potential for

significant losses if you don't do it correctly.

I will link to an episode I did with an options

expert who kind of explained it more in detail. But

one tip with this is to gain a solid understanding of

what options are and consider using them in a diversified

strategy. So make sure options is not your only thing that you're

doing because of the risk factor. But this can be

something in addition to once you learn more about it.

Another thing that you can do is short selling. So

short selling is selling borrowed stocks with the intention of buying them

back at a lower price. So this strategy profits from a

decline in the assets price. So if going back to the

first example, if you know that Apple's about to drop, you can

short sell Apple. And as it drops, you make

more money because you already bet that it was going to drop. Really,

the stock market is just betting for the most part.

So anyway, that's short selling. So some benefits to that

potential to profit in a falling market. So it can also be a hedge

against other portfolio risks. So if you know that

something's going to drop, you can do a short sell on it

and that can level out how much you lose with

that. Some risk to it, though it's unlimited loss potential

if the stock price rises. So if you. If

the price rises, you start losing money because it's opposite of

just regularly trading. And so it requires precise

timing and market insight. Like you really have to know what's going on in the

market in order to time things correctly, which

I said is very hard to time the market. But

that's part of the short selling strategy. So use this

strategy cautiously and consider pairing it with other risk

management techniques. Techniques. I remember when I was doing the

stock market challenges in my Facebook group, which I might bring it back. I don't

have the Facebook group anymore, but I might bring back the stock market

challenges in my community. But what that is is we

have fake money to use. And that's one thing that I use to

try out options, to try out short selling, to try out all of these

different things that I'm talking about today. Because there's

no real risk involved. You can see how the money's gonna

fluctuate. You can practice things like that. So I rec learning

in that way where you don't have to risk your own money. So I'll let

y'all know if I restart the Stock market challenge. Another

thing you can do is margin trading. So that's trading with

borrowed funds to increase the size of a position. So trading

margins, sometimes people call it, this strategy amplifies

potential gains and losses. So some benefits to that and enhances

purchase purchasing power and potential returns.

Some risks you can have magnified losses. So if you're already losing, you're going to

lose even more because now you're trading on the margin. Margin

calls can force investors to sell at unfavorable times.

So when you may not have sold regularly, if

you're trading on the margin, you might sell because

you don't want to risk too much. So

those are some risks involved. So I would say only use margin

trading if you have a high risk tolerance and a solid

risk management plan. So you have

high risk tolerance and capacity, really, and you

already know what you're going to do if things go south. Okay. And

the last advanced investment strategy I'll mention is hedge

funds. So these are pooled investment vehicles that use a variety of

strategies to earn active returns for their investors. They can invest

in a wide range of assets. So with hedge funds, now with

hedge hedge funds, most of the time you do have to be an

accredited investor, which, which I talked about in an episode. I'll have to find

it. I'll put it in the show notes. But you usually have to be an

accredited investor. Some benefits to this

is access to sophisticated strategies and professional management

and a potential for high returns. Most hedge fund

managers, they are the ones managing the money. They

just pool everybody's money together. So if you're familiar with the term

Ponzi scheme, most popular person in

recent time was Bernie Madoff. He was kind of like a hedge fund

manager where they pull people's money, put

it in things, and then, you know, make the money.

But with that being said, you have to be very careful because

sometimes it can be something like Bernie Madoff had

going on. So that leads me to the risk. There's high fees,

less liquidity, and it's complex strategies that may

or may not be transparent. So you may not know what's going on.

So my tip is to thoroughly research hedge funds

and consider your investment goals and risk tolerance before investing.

Make sure that you are familiar with who's going to be managing your money

and things of that nature. Because people have lost hundreds of thousands

of dollars in hedge funds that weren't properly ran.

So those are a few advanced investment

strategies that you can take advantage of. This can open doors

to new opportunities, but they also carry more risk than

the things that I've talked about before. So ensure that you have a

comprehensive understanding of these methods and don't hesitate to seek

advice from financial professionals that know what they're talking about

to align these strategies with your overall investment goals.

So hopefully that was helpful. And if you have

any more questions for me, feel free to go to

www.moneytalkwitht.com

asktiffany and I'll be more than happy to answer. We can keep

this investment train going or y'all can ask some new questions.

It's completely up to, but thank you so much for listening

and I'll see you next week. Bye. Thank you for

listening, joining and being a part of the Money Talk with Tiff podcast this

week. You can check Tiff out every Thursday for a new Money Talk

podcast, but if you just can't wait until next week, you can listen to

previous podcast

episodes@moneytalkwitht.com

or follow TIFF on all social media platforms at Money

Talk with T. Until next time. Spend wise by

spending less than you make. A word to the money wise is always

sufficient.