If you’re like most people, you work hard for your money, so it’s important to protect it. With the looming uncertainty in the market, it’s crucial to have a portfolio that can weather the storm. Based on historical data, here are 5 assets that can help protect your portfolio and even provide opportunities for growth during times of financial crisis:
Defensive stocks: During the 2008 financial crisis, defensive stocks such as healthcare and consumer staples outperformed the overall market. These stocks are of companies that tend to perform well even during economic downturns. According to data from Morningstar, defensive stocks have provided investors with an average annual return of 7.7% over the past 10 years. They offer stability and reliable dividends, making them a solid choice for investors who want to feel secure about their investments.
Gold ETFs: Gold has historically provided investors with a strong hedge against inflation, which can be particularly valuable during times of financial instability. The value of gold tends to rise during times of financial crises, making it a great way to protect your portfolio. Investing in gold ETFs can offer exposure to this asset without the need for physical storage. From 2000 to 2020, gold has provided an average annual return of 9.6%.
Cryptocurrencies: While investing in cryptocurrencies like Bitcoin can be volatile, they have been proven to be a good hedge against inflation and can offer high returns. According to CoinMarketCap, the total market capitalization of cryptocurrencies reached an all-time high of over $2 trillion in April 2021, showing their growth potential. It’s important to do your research and invest wisely in this asset, but it can be a great way to diversify your portfolio.
REITs: Real estate investment trusts (REITs) provide steady income through rental properties and have a long-term track record of appreciation. They are a great way to invest in real estate without the need for direct ownership. REITs have proven to be a great asset class during times of economic uncertainty, with the FTSE Nareit All Equity REITs Index delivering an annualized return of 8.8% from 1990-2020.
High-quality bonds: Bonds provide a fixed income and can offer stability during market volatility. High-quality bonds, such as government bonds, are considered safer as they are backed by the government. They have historically provided investors with a stable source of income during market downturns. From 2000 to 2020, government bonds have provided an average annual return of 4.1%.
By diversifying your portfolio with these 5 assets, you can protect yourself from market downturns while still aiming for growth. These assets have a track record of being resilient during financial crises and have even shown the potential for higher returns. However, it’s important to do your research and consult with a financial advisor to ensure that you are making the best decisions for your individual situation.
Remember, investing can be a great way to build wealth, but it’s important to do so wisely. By diversifying your portfolio with these 5 assets, you can help protect your investments and potentially achieve growth. However, every individual’s financial situation is unique, and it’s important to consult with a financial advisor before making any investment decisions.
If you’re interested in receiving financial consultancy services, don’t hesitate to contact me. As a financial analyst/advisor, I can help you create a personalized investment plan that aligns with your goals and risk tolerance. Let’s work together to protect and grow your wealth.