3 Ways to Reduce Investment Risks in Your Portfolio
Are you worried about stock market volatility in 2019? Ever since December’s record-poor performance on the stock market, major banks like Wells Fargo are predicting record-high volatility throughout the year. Everyone from passive investors to active traders gets nervous about high volatility, and you are not alone in looking for ways to reduce the risk to your investments.
A diversified portfolio is one that has international investments and investments outside of the stock market altogether. Below are some of the ways you can reduce risk by diversifying your investments.
#1 Sell Stocks and Buy Bonds
It may not be easy to sell stocks when things still look good, but selling stocks is the first step in diversifying your portfolio. Talk to your financial advisor about adjusting the goals of your portfolio. As you move into a risk-averse position (something everyone should do as they approach retirement), you can take earnings made from higher-risk stocks and move them into safer investments.
A conservative portfolio should be about 70 percent stocks and 30 percent alternatives, including bonds, real estate, or gold. As you get closer to retirement (or into your retirement), you want to steadily decrease your ratio of stocks to alternatives, as well as focus on income-generating investments. In terms of paper investments, replacing stocks with bonds can provide more stability, but not necessarily the best returns in a low-interest economy.
#2 Consider Real Estate
Income-generating real estate is generally a low-risk investment and a good way to keep returns coming in when other aspects of the market aren’t cooperating. There are still risk factors if there is a downturn in the real estate market, but rent-producing properties can pay for their own costs, including mortgage and maintenance, and it’s easy to wait for a more favorable market before selling while you collect profits from rent indefinitely.
#3 Invest in Gold Bullion
There are many reasons to invest in gold, but one of the most popular (and most frequently cited by investment experts) is risk management. Gold bullion tends to have a very low risk most of the time. The biggest risk with buying gold is usually watching stocks outperform your purchase, but if you’re looking for a safe place to store wealth, buying gold today is a great idea. Gold prices have been bearish but relatively stable for the last several years, opening a window for investors to buy gold in a low-risk position.
Physical gold bullion is usually the lowest-risk form of gold you can buy compared to ETFs or gold mining company stocks. Invest in gold coins or bars from reputable sources, including national mints. You have lots of options to choose from at Silver Gold Bull, an international gold company that makes buying gold coins and bars online simple. Do your research to find gold dealers that can deliver to you or provide trusted, insured storage.
In addition to stock market volatility caused by high stock prices, political factors continue to be a major concern for investors. Investors looking to find low-risk alternatives to stocks should look toward bonds, real estate, and gold.
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