How to Protect Your Long-term Investments From Uncertainties and a Volatile Stock Market
Are you wary of the continuous declining performance in the stock market? Do you see your favorite companies’ shares decreasing as the days go by? Before you actually go to panic selling, the financial experts advise you to take a deep, calming breath.
The financial experts don’t want you to commit a financial mistake which would lead you to miss out on the opportunity to grow your money to its maximum potential. They give some tips on how to manage your long-term investments, despite the ups and downs in the stock market.
Diversify Your Investments.
Despite knowing big, giant companies like Facebook, Apple, and Amazon, the truth is, you’re still uncertain whether or not these companies will survive for the next 10 or 20 years. So it’s important to spread your money and invest it in different types of investments rather than putting all of them in one company.
The purpose of this is to minimize your risks and losses in case one company declares bankruptcy or if they’re not performing as well as expected.
You can also diversify your types of investments like investing in stocks while having a mutual fund that invests in bonds. If you still have extra money left in your pocket, you can even invest in the international market. While you may still have some losses, it can help prevent your money from losing completely, thus, mitigating the stock market’s volatility.
Invest according to Your Time Frame
Most financial experts encourage you to invest while you’re still young. Why? It’s because you have the most potential to grow your money over time and invest it in the volatile stock market. Since you still don’t have major goals and priorities in life, there’s nothing to hold you back from investing your money.
But if you’re already mid-30s and you’re starting to build a family, or you’re in the 40s and you need to fund your children’s education, then the financial experts advise you to invest in bonds for security and less volatility.
You may get lesser potential returns but at least it’s less risky and you can secure the money to support your family or fund your children’s education. As you move closer to your retirement, you can invest in short-term investments so that you can access and use your money immediately.
Rebalance Your Portfolio
Aside from considering your time frame, you also have to consider your risk tolerance. Are you hungry for higher potential but don’t mind risking a lot of your money? Then you can invest a majority of your money in stocks.
If you’re conservative, it might be better to have a balanced portfolio. The financial experts recommend you review your portfolio at least every year to see if one of your investment performs better compared to others, or if you’ve met your financial goals. If not, then you can rebalance your portfolio with your advisor’s guidance.
It’s also important that you allow a fixed amount of money to save or invest on a regular basis to practice the art of saving. If you haven’t already, the financial experts recommend you avail of a 401(k) or 457 plan and have your contributions automatically deducted before you receive your salary. Not only are yoy saving on a regular basis, but you can also buy more shares when the share’s prices go low.
Shift Your Financial Strategy as You Approach Retirement
As you approach the retirement age, most financial experts will recommend you to shift your money to more conservative and short-term investments like bonds to protect your money against market volatility.
One way of doing that is through investing your savings in money-market funds. But if you’re still healthy and capable, you might also want to hold on to your investments a little longer and invest it in the stock market for higher potential returns. The final decision still lies in you.
More in Pocket Change
Hacks That Will Help Reduce Your Gym Membership Expenses
Do Not Pay The Requisite Initiation Fee Automatically Tom Holland who was once a gym owner and also the author of...January 15, 2019
SpaceX Announces Plans To Trim Its Workforce By 10 Percent
A spokeswoman of SpaceX recently told a media outlet that the company has plans to trim its workforce. The company which...January 14, 2019
This Is What Your Health Insurance Provider May Not Be Telling You
Some people know exactly how important it is to have health insurance, but there are still millions of people in the...January 14, 2019
Uber’s IPO Filing Will Affect Their Drivers And Consumers Badly
For decades now, taking a taxi or carpooling on your way to work, school, or literally in every anywhere you wish...January 14, 2019
Here’s Why Envisioning Retirement is a Good Idea
Aging is part of being human, it is just absolutely inevitable. This is actually one of the most important things that...January 14, 2019
Couple Makes $2,000 From Paying Mortgage With Their Credit Cards
Couple’s wise mortgage strategy An ordinary card owner may not be as brave as this couple, because they got the opportunity...January 14, 2019
Medicare Is Offically Letting People Have A Do-Over Until March
Healthcare has got to be the most important thing that everyone must prioritize in their lifetime. Everyone wants to have that...January 14, 2019
Top Ways to Make Your Money and Savings Grow
Everyone wants to save money. Whether you’re planning for a grand European vacation, buying that dream house, saving for your kid’s...January 14, 2019
Study Reveals That Debt Repayment Isn’t A Top Priority For Most Millennials
A study by Northwestern Mutual found that Millennials have debts totaling an average of $36,000 and they spend nearly 34% of...January 14, 2019