The United States lags behind a majority of the world with only 57 percent of adults understanding basic financial concepts, and 40 percent of millennials planning for retirement. Creating a strategy for a sound financial future is important, and building your portfolio with different investments is key to securing that future. Successful investing doesn’t mean less risky, it is all a risk, just at different levels. A strong strategy to reduce risk is to diversify your portfolio. One way to do that is to explore alternative investments.

Education is Key

Without an understanding of proper financial planning, it is difficult to build a financially secure future. The sooner retirement planning begins, the better. The longer money spends in an investment, the more it can grow. Simply saving at age 25 compared to age 35 can create a significant impact on your retirement fund. High school and college financial responsibility classes can help future generations begin stronger retirement strategies at a younger age. Teaching people how to be financially responsible and how to develop properly diversified portfolios is a strong step towards a healthy future.

Diversify Your Risk

The less-considered alternative investment, commodities (a subsection of futures), are an important part of a diversified portfolio. Together, stocks, bonds and managed futures create a well-rounded portfolio that can have substantially less risk than traditional portfolios comprised of stocks and bonds entirely. Another strong reason to include managed futures in your portfolio, is that they provide the opportunity for gains regardless of the current economic climate. Commodities can prove to be an effective tool to plan for retirement if executed properly with well thought out risk management.

Consider the Options

The most important aspect to becoming financially literate is education, specifically on what risk is, how to get started in investing and what options are available. Most people only know about stocks, bonds and mutual funds. However, IRAs are a viable tool for retirement planning that needs to be explored, and alternative investments should always be considered as part of a healthy portfolio. Many academic studies have indicated that managed futures lower the overall risk of a portfolio due to their negative correlation to stocks and bonds. Futures provide a nice buffer during inflationary periods, as investing in precious metals and other commodities can offer a hedge against the damage inflation causes on stocks and bonds.

Investing is a great step towards creating a financially secure future. However, the difference between investing and investing intelligently with a strategy can be significant. Even leaving all of your money in the bank, which can be a horizontal reward at best, is a recipe for disaster. It offers little to no growth, and placing all of your eggs in one basket is not a successful investing strategy. Working with a professional investment manager to create a tailored investing plan is the best way to progress towards a brighter, more secure future.