Thursday, 10 September 2009 22:08
As we muddle though this recession, here are 5 strategies to think about if you: (a) aren’t happy with the performance of your investments over the past year; or (b) are looking for ways to avoid finding yourself in this same position in the future.
Spread the wealth. Diversify your portfolio. Take advantage of risk-free cash options to offset your riskier investments in the stock market. For your stock market investments, be sure they are spread among different market segments.
Seek predictability. Large-cap companies have more predictable growth. They have steady streams of cash and although they may slide a little, they typically are more able to bounce back. Companies involved with consumer staples, such as household products, manufacturing, food, personal care items and healthcare tend to hold up better.
Cash is in. Consider putting more of your investment dollars in certificates of deposit, short-term bonds, and money market accounts.
Look overseas. Research companies that are located in or are focused on growing overseas markets.
Think long term. Remember that markets are cyclical and the economy will rebound. The best approach is to be patient and wait it out.
Setting up a recession-proof portfolio provides an opportunity to take a closer look at your investment approach. By doing this, you will be able to determine whether or not your portfolio is protected so that you can meet your long term financial goals.