A Diversified Portfolio Helps You Weather the Storm
When a Category 5 hurricane is potentially bearing down on your home, you start to memorize exactly when the new data for the storm is available.
You flip channels and hit the various news sites, gathering information from multiple sources.
What are your odds? Is it better than a 50% chance that the hurricane is going to slam into your home? And what’s the strength likely to be?
My husband and I have closely watched the approach of Hurricane Irma as it draws closer to the U.S. We’ve lived in South Florida for less than four years, and this will be our second hurricane. We easily rode out Hurricane Matthew, which turned into a nonevent for us.
I don’t think we’re going to be quite so lucky with Irma.
Things are starting to look bleak as the hurricane draws closer, and we’re weighing what we’re willing to risk by staying against what we gain by riding out the storm at home.
Investors are weighing a similarly difficult question when it comes to the market…
More Than One Black Swan
Investors have grown anxious regarding the market over the past several months. We’ve enjoyed some solid gains. But major market indexes that hit new record highs not long ago are starting to roll over.
Have they traveled too far, too fast?
We also have two major meetings of the Federal Open Market Committee (FOMC) later this year, and the Federal Reserve is looking to lift interest rates at least one more time before the close.
Is the Fed about to derail the growth that we’ve enjoyed and send the market sharply lower?
Or maybe it’s not even the U.S. economy that kicks off the correction.
We’ve got North Korea testing missiles, the U.K. is struggling with Brexit, and other issues around the globe could prove to be the black swan event that sends stocks sharply lower.
But you just need the right plan to get you through the next market correction.
Are You Prepared?
Your plan should have one key component to allow you to sleep at night: diversification.
I know, you’ve heard that word before. It’s a common word for every financial planner.
But by having your portfolio in a mix of investments, from aggressive stock positions to overseas currencies to natural resources to physical gold and rare tangible assets, you are assured to have a piece of your portfolio rising even during the toughest of times.
With aggressive stock positions, you are enjoying gains right up until the market crashes, and you’re not left wondering if you took your money out too soon.
With natural resources, you are following the cycles of the resources themselves, which is often different than the broad market cycles.
With physical gold, you have an insurance policy against market disaster, as the yellow metal tends to gain in value during significant downturns and times of growing turmoil.
And by having the investments structured in the proper vehicles, whether that’s a traditional IRA or a self-directed IRA or even a Health Savings Account, you know that you’re maximizing your portfolio growth while reducing your tax obligations.
These simple steps help ensure that you’ve got a disaster plan in place when the market finally takes a dive. You don’t have to worry about the timing. You don’t have to worry about whether you’ve stayed too long at the party. You don’t have to worry that you should be sitting in cash.
A properly diversified portfolio helps you to weather the storm and protect yourself from growing risk.
My husband and I have a plan when it comes to Hurricane Irma that will keep us safe and comfortable regardless of which direction it finally hits.
For all Americans in the path of yet another hurricane, we hope that you are safe and secure as well.
Sr. Managing Editor, Sovereign Investor Daily
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