{"id":42940,"date":"2023-02-27T14:21:14","date_gmt":"2023-02-27T19:21:14","guid":{"rendered":"https:\/\/ilgfinancial.com\/staging\/2370\/?p=42940"},"modified":"2023-02-27T14:21:14","modified_gmt":"2023-02-27T19:21:14","slug":"5-ways-to-cover-downside-risk-in-your-investment-portfolio","status":"publish","type":"post","link":"https:\/\/ilgfinancial.com\/staging\/2370\/5-ways-to-cover-downside-risk-in-your-investment-portfolio\/","title":{"rendered":"5 Ways to Cover Downside Risk in Your Investment Portfolio"},"content":{"rendered":"

\"\"1 – Introduce Portfolio Diversity<\/strong><\/p>\n

Diversification in this context means selecting multiple different assets to invest in as opposed to choosing one to put all your money into. Furthermore, diversifying between sectors and industries may also help isolate a losing investment and help protect yourself from having to make up ground after a steep loss.<\/p>\n

2 – Add Non-Correlating Assets to the Mix<\/strong><\/p>\n

Introducing non-correlating assets to your portfolio refers to the idea of taking diversification one step further by investing in different asset classes altogether. We\u2019ve seen the whole stock market decline at the same time, no matter how diversified across industries your portfolio is. So non-correlating assets would refer to bonds, commodities, stocks, real estate, and other assets that don\u2019t operate in the same markets.<\/p>\n

3 – Take Advantage of Dividend Opportunities<\/strong><\/p>\n

Dividends can act as a buffer to losses which can help protect your downside risk significantly. In addition, companies often don\u2019t change their payout rations based on daily stock market performance, making them a great protection against volatility as well. If your investment lost 3%, but you earned 3% via a dividend, then there is essentially no lost ground to make up.<\/p>\n

4 – Fixed-Income Investments<\/strong><\/p>\n

Fixed income may not sound flashy or enticing right off the bat, but when it comes to the robust wealth and income strategy you expect over the course of your retirement, fixed-income investments such as high-yield savings accounts, treasury notes, and certificate deposits are structured to generate income without being tied to a market that can experience volatility such as stocks or real estate, making these types of investments suitable for downside risk protection.<\/p>\n

5 – Annuities<\/strong><\/p>\n

Annuities are multifaceted insurance-based investment products structured to generate income in retirement. Some annuities come with many different forms of downside risk protection in the form of non-stock market income or principal protection. Some may even help you protect against risks or costs you may need to cover in your own life, making them a loss-protection option worth considering.<\/p>\n

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Sources:<\/p>\n