The stock market is unsettled? and perhaps its fluctuations are unsettling you. It’s a stressful time for the economy and Wall Street, and you may be concerned about your portfolio given what’s going on with oil prices, the real estate market, and rising unemployment figures. It may be a good time to review how your assets are invested.
Is your portfolio balanced? A balanced portfolio may help you ride out stock market turbulence. Stocks and mutual funds aren’t the only asset allocation choices you have, and you won’t be alone this year if you decide to examine other investment options.
A well balanced portfolio should help to reduce market risk and portfolio swings. Adding alternative asset classes with low correlation to the broad stock market may help to avoid or limit portfolio loss in any individual calendar year.
Examples of low correlated alternative asset classes may include natural resources, real estate, utilities, precious metals, fixed annuities and Treasuries to name a few. Often these types of assets become attractive to investors when the market turns volatile. Normally bonds tend to maintain their strength when stocks perform poorly. Fixed annuities are simply contracts with insurance firms, and are not correlated to stock market performance (though certain types of annuities may enable you to take advantage of stock market gains while maintaining your principal). Fixed-income mutual funds, dividend income funds and bond funds also have their adherents. Of course there is cash, though cash holdings haven’t traditionally performed anywhere near the level of the stock markets, but it can help as a temporary preservation strategy.
See what one alternative asset class did by looking up my January 9th on line financial column titled ‘Why Gold Went up 30% ..? by logging onto www.LakeOrionReview.com and type in the Site Search box ‘Financial Health?.
Are you retired, or retiring? If you are, this is all the more reason to review and possibly even revise your portfolio. Frequently, people approach or enter retirement with portfolios that haven’t been reviewed in years. The asset allocation that seemed wise ten years ago may seem foolhardy today. Preservation is more important than ever.
Often, people in their fifties and sixties feel they need to accumulate more money for retirement, and that feeling leads them to accept more risk in their portfolio than they should. In the absence of a salary, however, you’ll likely want consistent income and growth, and therein lies the appeal of a balanced investment approach designed to manage risk while encouraging an adequate return.
Why not take a look into your portfolio? Ask your financial advisor to assist you. You may find that you have a mix of investments that matches your risk tolerance. Or, your portfolio may need minor or major adjustments. The right balance may help you insulate your assets to a greater degree against financial ups and downs.
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Loran S. Coffman is a Representative with H. Beck, Inc. and may be reached on the web at www.WPSinvestments.com, by phone (248) 693-5599, or by email Advior@WPSinvestments.com. See ‘The Science of Financial Health?,Coffman’s exclusive weekly financial column on the web every Wednesday at www.LakeOrionReview.com.
These views are those of the author and should not be construed as investment, tax or legal advice. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please consult your Investment, Tax and/or Legal Advisor for further information and advise about application to your specific circumstances.
Securities offered through H. Beck, Inc. Member FINRA, SIPC. Investment advisory services offered through M.R.Spencer Advisory Services, LLC. WPS-Investments, Inc. is unaffiliated with H. Beck, Inc. Lighthouse 436 S. Broadway, Suite F, Lake Orion, MI 48362