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How to Diversify Your Portfolio For Uncertain Times

By diversifying your investments, you can weather the ups and downs of the market and ensure your portfolio remains strong for years to come.

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by The Star

Markets19 February 2025 - 09:19
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In Summary


  • A diverse investment portfolio that includes mutual funds, precious metals, bonds, and real estate can help protect against economic downturns. By spreading your investments across various sectors and asset classes, you reduce risk and increase your potential for steady growth.
How to Diversify Your Portfolio For Uncertain Times
Diversity is the key to a successful investment portfolio. This goes beyond investing in a few different mutual funds. You need precious metals, tech stocks, bonds, real estate, and anything else you can get your hands on. We can't all be snipers, finding a surefire investment, so it's better to use a shotgun strategy and pray one of your BBs hits. Here's how you can do just that and hopefully avoid the brunt of the punch when the economy inevitably takes a downward swing in the future. It may not be tomorrow or even a year from now, but you'll be ready.

Mutual Funds and Stocks

If you bought $100 worth of Tesla every month since its IPO, you'd be a millionaire. If you did the same with Enron, you'd have nothing to show for it. You don't want to be putting all of your eggs in one basket. There are more companies that have gone bankrupt and delisted off stock exchanges than there are companies on the stock exchange today. In an ideal world, all of your picks would be winners, but you're not a fortune teller. It's better to invest small amounts in a wider variety of companies and industries than in just a few.

Mutual funds and ETFs are great ways to spread your eggs out without having to know about every single company in the fund. Your investment is tied to the performance of tens, sometimes thousands, of different companies, meaning that if one does badly, you are only slightly hurt. It helps spread out the negatives of a company reporting a loss on earnings or even going bankrupt.

Through brokers like Exness, you can easily choose which funds to invest in. Since professionals pick the securities within the funds, you're basically joining them and millions of other investors for a ride. Pick funds that have shown steady growth, headed by well-known investors. Pick 1-3 funds for different sectors, such as farming, restaurants, tech, oil, solar, mining, etc. Unless the market is in a complete recession, it's extremely unlikely for all of your funds to be consistently in the red, meaning your portfolio will (hopefully) be in the green.

Invest in Precious Metals

Precious metals are a great way to invest. Gold, silver, and other precious metals have routinely grown in value. You don't have to go out and buy a piece of gold bullion; there are stocks and funds you can use to invest in precious metals, but it is sometimes better to have that physical piece of gold in your safe.

Gold can be easily traded for cash in an emergency, especially if there's a problem with the markets. Terence Hove, Exness Financial Markets Strategist Consultant, notes, “Gold’s role as a safe haven is growing stronger as traders look for stable assets amid inflation and shifting global policies. With continued market volatility, gold remains essential to a diversified portfolio.”

Some people will also collect palladium, copper, lead, tin, etc. It's not investing in the modern sense, but it is a great way to build up a valuable collection of precious metals. There's a reason why eWaste and scrap is a huge industry. As the demand for these limited resources grows, so too will the value.

Bonds

If you're new to investing, you probably recognize this word but have no idea what it means. It's essentially the opposite of getting a loan from the bank or government. Instead of them giving you $20,000 and expecting the full $20,000 back plus the agreed-upon interest, you give them money, and they pay you back.

Bonds are most often purchased from governments, but companies sometimes do it as well. They're great because you're guaranteed that interest rate, essentially. This means that if the markets are uncertain and the average 7% return doesn't seem guaranteed, a bond with a 5% interest rate can seem more appealing.

Now, the rates and periods differ wildly, so you'll have to really crunch the numbers and figure out if it's worthwhile. In most cases, bonds are a great way to ensure that your money does not depreciate due to inflation and instead slowly increases in value.

Bonds almost always do not outperform the stock market, but that isn't their point. The stock market can be risky. You can employ safer strategies to mitigate that risk, but unless a government goes back on their word and refuses to pay out, you're basically guaranteed a certain return.

Real Estate

No, you don't have to own an apartment complex or a dozen houses to invest in the real estate business. Some people don't want to deal with the headache that comes from owning a 100-unit property in a large city, and that's perfectly fine. There are real estate companies that you can invest in instead. Still, owning the property outright may be a better way to diversify your portfolio, but we understand that's not for everyone.

Companies like Blackrock are huge real estate moguls that trade publicly. Their stock has basically tripled in value over the last decade, which should come as no surprise since real estate prices are insane right now around the globe. Real estate indexes also exist, which can be a better option unless you are read up on specific real estate companies.

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