What Investors Could Do to Their Portfolio During This Uncertainty?
Today’s economy is one marked by heightened uncertainty. As the world recovers from a pandemic that underscored persistent and recurring issues, the World Bank reports that global conflicts like the Russian invasion of Ukraine have worsened economic conditions. Ultimately, we might be seeing an extended period of slow growth and aggravated inflation.
For investors, making crucial decisions is critical to ensuring financial security under such turbulent conditions. With everything going on, it’s important to build a strong portfolio to see you through what could be a prolonged period of uncertainty.
Here are some things that you can do to your portfolio in the current economic climate.
Diversify your Portfolio
Investments are inherently risky, so it’s important to build resilience in your portfolio that can offset losses you might incur in certain markets. This is why you should invest in different asset classes, from stocks to ETFs. Even if you have investments that have performed well for you, it’s important not to pin it all on very few assets. You should also hedge by investing in markets that move in the opposite direction to your most volatile assets. Say, if you have stocks that are known to be volatile, you would also want to invest in bonds or investment funds.
Consider spread betting
Spread betting is a derivative strategy where you can speculate on both rising and falling financial markets, without owning the underlying asset that you’re betting on. Depending on your bet, you would either buy the market to go long, or sell it to go short, and the profitability of your spread would be determined by the accuracy of your bets. FXCM explains that spread betting’s advantages include flexibility, available leverage, market diversity, and ease of trade. As with any form of trading, spread betting necessitates carefully thought out strategies such as breakout, news-based, reversal, or trend market spread betting. If properly executed, aside from being lucrative, spread betting also has the added benefit of being tax-free and commission-free.
Invest in energy
Investing in energy is practically non-negotiable. Since oil is a commodity, it has value as an asset and can be traded as an investment derivative. Even though the oil and gas sector has a tendency to be cyclical, and can be volatile due to external factors that influence its distribution, its prices are always bound to go up. Timing is a critical factor in the successful turnout of your energy investments. But especially these days, the war that Russia waged on Ukraine has caused the stock prices of oil to soar, following its collapse during the pandemic. UBS analyst Giovanni Staunovo states oil will continue to garner demand, and it is only expected to improve further as China reopens and summer travel in the northern hemisphere begins to rise.
Putting money into what you believe in
Real estate investment trusts (REITs) are companies that own real estate that produce income. REIT investments are perfect for diversifying your portfolio and are a good choice in uncertain times since they provide high yields, good values, great profitability, and strong growth rates. REIT specialist Kenny Loh has stated that since the reopening of borders has been normalised, it has not had any adverse effects on healthcare and office REITS, while hospitality REITs look promising. In today’s economic state, the profitability of REITs may be largely beneficial for investors.
Uncertainty can hit any time, but there are always ways to protect yourself from these occurrences. So if you’re aiming for financial security, then it’s important to start making the proper investments now.
