Have you been asking yourself where should you park your assets so they stay safe during what could be a terrible year? If that query has popped into your head lately, you are not alone. People of all income levels are worried about what 2022 might bring. This is particularly true for those who are concerned that inflation is already making its first major appearance in years. Fortunately, there are dozens of ways to side-step a potentially bad year and come out unscathed, with assets intact.
Historically, people tend to pull out a significant portion of their traditional portfolio assets in bad times and put them to better use. A few of those choices include, taking cash from stock sales and using it to pay down a mortgage, learning how to day trade stocks, going to an all-cash position, and strategically diversifying current portfolios. It is important to understand how to manage risks so that you are prepared for any possibility. The following details explain a bit more about each technique.
Paying Off Your Mortgage
For millions of homeowners, the smartest use of extra money is paying down the mortgage. When the securities markets are volatile and you simply don’t have time to start up a side job or open your own company, doing an early mortgage pay down can save you a huge amount of money in the long run. Even chopping five years off a typical 30-year obligation represents many thousands of dollars in interest saved.
Investing in a new company, that you own, is often the best way to leverage the power of financial assets. Putting your capital into a day trading business can be a profitable way to use the financial resources you have at your disposal. Compared to other ideas people often have for new businesses, day trading has several unique advantages. First, the learning curve is short. You can even learn most of what you need to know from an online guide designed especially for beginners. The guide teaches first-timers about setting up accounts, what rules they need to follow, and how to go about opening and closing within the same day on every trade you make.
At first, people typically downplay the idea of going to cash in a down economy, but once they stop to consider the unique benefits of the strategy, they often change their minds. For example, if stocks are tanking and you sell everything to achieve an all-cash account, you have the power to wait for the market to bottom out and pick up excellent bargains. Wealthy investors use this approach on a regular basis, but the best part is, you need not be a millionaire or billionaire to profit from the technique.
A Diversified Portfolio
Perform an honest evaluation of your portfolio. Does it contain stocks and other assets that could take a major hit in an off year? If so, consider diversifying away from stocks and replacing them with things like bonds, commodity-based ETFs (exchange traded funds), precious metals, and REITs (real estate investment trusts). If you have confidence that the market is set to fall in a big way, consider adding some reverse ETFs to your holdings. They go up in value when the general price level of their sector declines.