{"id":19836,"date":"2020-01-06T13:00:17","date_gmt":"2020-01-06T18:00:17","guid":{"rendered":"https:\/\/www.cashcolorcannabis.com\/?p=19836"},"modified":"2020-01-05T23:28:16","modified_gmt":"2020-01-06T04:28:16","slug":"add-cannabis-to-your-portfolio-5-tips-to-start-investing-in-2020","status":"publish","type":"post","link":"https:\/\/www.cashcolorcannabis.com\/2020\/01\/06\/add-cannabis-to-your-portfolio-5-tips-to-start-investing-in-2020\/","title":{"rendered":"Add Cannabis To Your Portfolio: 5 Tips To Start Investing in 2020"},"content":{"rendered":"\n
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Add Cannabis To Your Portfolio: 5 Tips To Start Investing in 2020<\/figcaption><\/figure>\n\n\n\n

Saving and investing are essential building blocks to financial success and creating generational wealth. With US Cannabis Market<\/a> sales projected to grow to $30 billion by 2025, investing in cannabis offers a once in a lifetime opportunity that can\u2019t be ignored. Ironically, I was restricted from recommending cannabis stocks when I was a financial advisor due to its federal illegality, however it was one of the most frequently asked about investment topics I would get when meeting with clients. If you\u2019re not already, it\u2019s time to start investing in 2020 and the burgeoning cannabis industry is worth considering as part of your strategy.<\/p>\n\n\n\n

A few days ago I released a video, 4 Cannabis Stocks You Can Buy on Cash App on any Budget<\/a> to encourage people that have been on the fence to take the leap and start investing. Here are 5 tips to help you start investing in 2020 and include cannabis companies in your portfolio. <\/p>\n\n\n\n

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Start With Your 401k<\/strong><\/p>\n\n\n\n

Believe it or not my first piece of investment advice is not a hot stock tip, but that the first place you should start investing is your company\u2019s 401(k) plan. You likely won\u2019t find any cannabis stocks there but there are a few reasons that this should be at the core of your investment strategy. The first, is that the IRS will allow employees to contribute up to $19,500 on a pretax basis to their 401(k), 403(b), or Thrift Savings Plan and an additional $6,500 catch up contribution for employees over the age of 50.  This is a big advantage because it allows you to grow your investments tax free. Another reason that your employer\u2019s plan is a good place to start is to take advantage of the 401(k) match program.<\/a> <\/p>\n\n\n\n

At a bare minimum you should be investing at least the amount that your employer will match or you\u2019re leaving free money on the table. As a rule you should be saving at least 15% of your pre-tax income and try to work your way up towards maxing out your contribution. Most plans offer target date funds to automatically invest your money based on your current age and anticipated retirement date. <\/p>\n\n\n\n

Diversification<\/strong><\/p>\n\n\n\n

Diversification is another one of the most important investment principles. The simplest way to explain this is the age old adage, don\u2019t put all your eggs in one basket. You can diversify by buying stock in multiple different companies. An easy way for an investor with limited funds to experience greater diversification is by purchasing ETFs or mutual funds. Three of the largest cannabis ETFs are the ETFMG Alternative Harvest ETF the Horizon\u2019s Life Sciences Index ETF<\/a> and the Cannabis ETF. <\/a><\/p>\n\n\n\n

Even if you\u2019re super excited about cannabis investing your portfolio should include other sectors as well. Also, most investors\u2019 portfolio should have some allocation to bonds along with stocks based on their risk tolerance and investment goals. Although diversification doesn\u2019t guarantee against losses it can help to limit portfolio downside by spreading the risk.<\/p>\n\n\n\n

Buy Low, Sell High<\/strong><\/p>\n\n\n\n

Cannabis stocks experienced double digit losses<\/a> to close out 2019 but that doesn\u2019t mean that the ship has sailed on the opportunity. As a matter of fact, it offers an even better entry point. Investing is a long-term game. One of the biggest mistakes that novice investors make is panicking and selling their portfolio when the market dips, which is actually the opposite of what seasoned investors do. <\/p>\n\n\n\n

Historically speaking, the stock market has always gone up in the long term and we should not expect that to change anytime soon. If a company has sound fundamentals and you believe in the growth prospects of the industry declining prices can be viewed as a buying opportunity. Imagine if you went to the dispensary and the same bud from your favorite grower that was $60 an eighth yesterday is now on sale for $35 an eighth. You would probably consider taking advantage of the discount and buying a bit more. The same principle applies here. Investing can be very emotional but learning to show discipline can pay off huge. Despite average intra-year drops of 13.8% the S&P 500 has delivered positive returns in 30 of the past 40 years.<\/a><\/p>\n\n\n\n

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