The secret sauce in this strategy

While the term is outdated, Christianson says the principle behind it has endured — in fact, it has displaced other strategies to become the go-to approach in investing.

“In general, what used to be called widow and orphan stocks have generally outperformed the other class which are… growth stocks,” says Christianson.

Looking for the safe and steady stocks that widows and orphans tended to favor isn’t hard. Think of the big banks, commodities or utilities — businesses that provide essential services or products that are still needed regardless of the state of the economy.

Depending on how you define it, some examples may include Verizon (VZ), WalMart (WMT) and energy company Exxon Mobil (XOM).

But experts would remind you even with “low risk stocks,” there’s never zero risk associated with the stock market.

“I think it’s really important to note … that [you] are still investing in the stock market,” says Ryan Gubic, a certified financial planner and founder of MRG Wealth Management in Calgary, Canada. “There is no guaranteed return. These types of stocks can have a history of going down less than some of the higher risk alternatives, but you can still lose money.”

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Pick your portfolio wisely

The widow-and-orphan strategy is boring, but it has a track record of working.

Gubic advises his clients and DIY investors who follow this approach to remember to stick with it. Don’t follow your gut or intuition about which way you think the market will go. Instead, evaluate your goals, how much risk you’re willing to take on compared to how much risk you can afford to take on. Then — and only then — should you pick your investments.

“Let’s say someone … says, I'm comfortable with a ton of risk. And they're, for example, maybe a single mom with three kids at home and a number of other factors, the capacity might not match what their comfort level is,” says Gubic.

“Sticking to a plan and a strategy over the long haul has been a proven recipe to help people achieve their goals, versus trying to time the market,” says Gubic. “And I think that's a common major mistake that some do-it-yourself investors try to make.”

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

— With files from Samantha Emann

Fine art as an investment

Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.

That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.

Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.

On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.

Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.

Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.

About the Author

Sigrid Forberg

Sigrid Forberg

Reporter

Sigrid is a reporter with MoneyWise. Before joining the team, she worked for a B2B publication in the hardware and home improvement industry and ran an internal employee magazine for the federal government. As a graduate of the Carleton University Journalism program, she takes pride in telling informative, engaging and compelling stories.

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