3. Stop Losses ?
A stop-loss sounds sensible as a protective measure.
But in reality it could make you sell at a low, when you should instead be buying. Watch my video on stop-losses.
However, for individual stocks, a stop-loss could be useful to protect gains, particularly if the stock has seen a strong run.
4. Options – for Safety Margin and Income
Options can be a less risky way to invest Vs buying stocks in the usual way.
This may sound surprising but options let you invest with a safety margin AND earn income.
Learn how this works here.
5. Options – as Insurance
If you need a more direct hedge you can alternatively purchase insurance via Options. We do this by buying Put Options.
This works exactly like car or home insurance. You pay a relatively small premium to cover against ‘losses’ on your portfolio.
6. REITs and High Dividend Stocks
REITs are a passive way to own property, with all rental income received tax-free (inside your ISA and pension).
They also pay higher dividends. As do high dividend stocks (clearly)!
Both would be relatively stable in a downturn. Why?
In a downturn we would expect bonds to rise (a flight to safety) and bond yields to correspondingly fall.
REITs and high dividend stocks are fairly defensive and sensitive to bond yields (inversely).
Also, in a downturn, dividends hold up better than capital values.
So both of these should benefit from uncertainty and lower bond yields.
7. Do Nothing
For a long-term investor, one very good option is to do nothing.
“More money is lost waiting for corrections than in the corrections themselves” … said legendary ex-Fidelity fund manager Peter Lynch.
Making predictions is easy but timing is hard. To get it right, you have to sell at the right time and buy back at the right time. Which is almost impossible.
Being a set-and-forget investor is far better and easier. And record highs are not as worrying as they sound.
Finally, what if markets do decline?
Of course they will – they always do.
We know that market declines are only ever temporary, never permanent. Meaning long term investors should not fear.
Always remember to separate Volatility vs Permanent Loss.
With a good plan and mindset you’ll embrace volatility as a wealth-creation opportunity, rather than fear it.
Always Remember:
- Time in the Markets always beats timing the markets
- Stay Diversified
- Minimise those leakages: Fees, Inflation, and Taxes
- Financial Markets are a great source of recurring income
- ETFs, Balanced Funds and Options achieve all the above
- Being educated helps you outperform 99% of the population
… to ensure your investments work for YOUR financial freedom (not someone else’s)
And …
For more guidance, our Investment Academy will help you implement all of this in a step-by-step way.
Thousands of people have learnt how to diversify and pound-cost-average into low-cost, set-and-forget ETFs & Funds for inflation-beating growth. And Options to create recurring income.
Click here to learn about our Investment Academy
Finally …
– Don’t take the above as advice as it may not apply to you personally
– Your Capital is at Risk
– You may not be covered by the FSCS
– Anything mentioned in a podcast or in a previous article was valid at that time and may not continue to be now |
