- May 14, 2013
- Posted by: John Fischer
- Category: Accredited Investors
The financial market changes every day. It makes millionaires and with a few bad trading days can deplete your investment holdings and put your retirement at risk. In order to protect yourself against market volatility many investment advisors will scream, “diversification… diversification.” What does that actually mean? The exact strategy will be based on your current investment portfolio and future goals. Your investment advisor is the best person to give you specific advice.
Here are some general strategies for protecting your investments against market volatility:
- Invest in Gold. Commodities are a good thing to have in your portfolio. Gold has historically gained in value regardless of what the financial markets are doing. It is also a currency that can be used throughout the world, regardless of what language you speak, or where you go. As an added bonus you can wear your investment as beautiful jewelry.
- Real Estate. Incorporate some real estate assets into your retirement portfolio. You can earn rental income and provide an additional source of monthly revenue in an asset that traditionally gains in value. Even if the gains are slow, the cash flow can help to substitute your monthly employment income as you age.
- Energy. We need energy in order to power our economy. Our manufacturing plants, cars, airplanes, trucks, houses, schools, and companies all depend on energy in order to function. Whether you invest in oil and gas or wind energy, incorporate some energy investments into your portfolio.
- Small Businesses. You can invest in your local economy by investing in small businesses. A great way to do so is by becoming an Angel Investor. You can join an angel investment group and have entrepreneurs pitch you on their ideas every month. You will have access to quality deal flow, be able to perform your own due diligence, and visit your investments as often as you want. That is the best part about investing in local companies. You can become directly involved in the business and help it succeed. You can also become a passive investor. How you structure the deal is up to you.
- Private Placement Memorandums. You can invest in companies that are raising funds through PPM’s. These are companies that traditionally would go after bank financing but are seeking alternative capital sources. This gives investors access to established businesses with a proven track record that have not yet taken their company public. You can work with several broker-dealers and become an investor on their list to gain access to these deals. Just be aware that they typically have set closing dates.
We are not an investment advisor and can only give tips and ideas. Speak with your licensed advisor to discuss the options available to you. Diversifying your portfolio is a smart investors way to insure against the unexpected. There is no way to know exactly what the market will do in the future so investing in multiple avenues is a good way to ensure that your portfolio holds steady and grows as the market fluctuates and changes.
We hope this article helps protect you against market volatility.