Regardless of what asset you are using to build a portfolio or trade having a clear idea of its risks and rewards are very important. However, understanding yourself is even more paramount.

If your personality and strengths in life curve towards a patience and long term view then the bulk of your portfolio and strategy should have longer time horizons with an emphasis on less volatility. Having said that given the current zero rate environment that seems to be changing, an investor in this situation may want to protect and enhance his portfolio by hedging with a conservative option program.

The options can provide some downside protection (buying puts) while obtaining premium by selling covered calls on stocks and bonds.

Aggressive investors may want to explore alternative investments that carry substantial risk but can help diversify and provide the opportunity that only leverage can give.

Some commodities are at very low price points and futures and options or ETFs can give the trader some opportunity during times when stocks and bonds are either stagnant or in a bear market.

Inflation can quickly eat up the interest received on bonds and if you don’t hold to maturity you can have a principal loss that can be substantial.

This requires a lot of home study of charts and reports, an understanding of the tools, and assessing risk to reward, and your personality. Stock indexes, and bond indexes are quite liquid. ETF's have also become quite popular. Commodities and to a lesser extent commodity ETF's can also be used. Currency trading, buying and selling vs the U.S. dollar can be exciting but very dangerous. ETF's may be a better choice for most, futures and options only for those who do not overleverage and have an effective exit and entrance point.

If you are reading this post, most likely you have some knowledge of how investments work. Use the resources or connections that you have or reach out to people on this site for further expertise. We live in a disruptive phase in business and world events, indeed some experts believe that some major companies may not exist in the next decade or so.

Expanding world trade which increases competition for investment by allowing more choices also raises new risks and rewards. I believe that there are huge opportunities, finding ones that suit your personality and time horizons are important. Remember to invest and trade with a plan, live consciously and manage your way to success.

John is a Senior Broker at Sierra Mesa Trading and has been working with clients in the field of financial products for over 25 years. John can be reached at LinkedIn