Building a portfolio that can handle market volatility amid the Coronavirus
With Coronavirus worries creating rapid changes in the markets, your portfolio construction can be the difference between continued growth or difficult losses. The markets will ebb and flow, but the secret to quality investing is not the amount of money in your account, but rather the quality of your portfolio. Your portfolio is the principal tool we us to handle market volatility. We thought it was time to touch on some of the ways in which you can build a portfolio that can handle market volatility.
- Figure out an objective
Your portfolio needs direction. Whether you are looking to invest in your retirement, or save up enough for your children’s schooling, you need an objective. This objective should be long-term, and big enough that it is something to work towards, but not so vast that it is unattainable.
- Limit Investment Turnover
- Portfolios should be invested for long term objectives. Look at this way; you should not rent a stock. Instead, you should look to invest in a business. Yes, you can have some short-term investments, but the majority of your portfolio should consist of stocks that you are okay to invest and hold-on to for up to ten years.
- Be realistic and understand the ups and downs of the market
Investing in a low-yield fund and expecting it to triple in the first year is not going to happen, so why would you expect it? Instead, take the time to understand your investments and know what to expect in terms of return. This will allow you to ride the market during the highs and the lows and continue to keep an even keel over the long-term.
Investing is a long-term game, and betting all of your money on a single investment or asset class over a five-twenty-year period does not make sense. Instead, look to diversify your investment across multiple investment in several sectors and asset classes. Thus, if one market is struggling, one of your other companies will take up the slack until the market corrects. Simply put, diversification will allow you to continue to see less volatile returns year over year.
- Talk to an expert!
We are here for a reason, and we can help build your portfolio to ensure that it can ride out market volatility. Our entire job is to help guide your portfolio and money to grow over time, and we are here for you!
No matter if COVID-19 has a continued effect, we can help you navigate the daily ebbs and flows of the market. Need help building a portfolio, or want a second opinion on your current set-up? Let’s chat!
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2020 Advisor Websites.