Investing is never smooth sailing. It’s almost guaranteed that you’ll need to be prepared for risk, especially when the market shows rapidly changing economic turns that could significantly impact your financial portfolio. How can you overcome this and make sure you’re prepared for any volatile changes? Defensive strategies. Let’s look at a few that can help navigate through unsteady markets:
- Assess Your Risk
Based on your financial goals, it’s essential for you to evaluate your exposure to possible risks within the economic market. Once you determine your risk tolerance and how that aligns with your future goals, you can choose more specific strategies that’ll help with unsteady markets. - Diversify Your Portfolio
Spread investments across different asset classes, industries, and geographical regions to reduce the effects of a downturn market in any one area. Diversification can decrease your overall risk and volatility. - Defensive Sectors
Investing in sectors that historically perform well during market downturns can add an extra level of protection against volatility. These sectors can be things like health care, utilities, consumer staples, etc. - Monitor and Adjust
Regularly rebalancing your portfolio based on the market, your risk tolerance, and your financial goals will help maintain your intended asset allocation and peace of mind around your investments. This will ensure you’re aware and protected against the uncontrollable.While market volatility can be unsettling, implementing defensive strategies can help mitigate risks and protect your investments during times of instability.
Sources:
[1] https://www.rocketdollar.com/blog/defensive-investing-how-to-protect-your-portfolio#:~:text=Defensive%20investing%20strategies%20typically%20involve%20investing%20in%20less%20sensitive%20assets,goals%20over%20the%20long%20term.
[2]https://www.investopedia.com/terms/d/defensiveinvestmentstrategy.asp#:~:text=A%20defensive%20investment%20strategy%20entails,cash%20equivalents%20in%20down%20markets.