How to be financially sound in a volatile market
Financial markets across the globe are still reeling from the after-effects of Trump’s victory. Doubts and insecurities are on a steady rise as existing and new laws and legislations from the previous ruling party are being reformed or upturned altogether.
This has caused the U.S dollar to touch a near 13-year high (since April 2013) against a basket of currencies. Perhaps it’s a premonition of plausible tumultuous times ahead that we should brace for.
Despite all the implications fueled by the post-U.S. election rally, one thing holds true; that through any storms we should weather, it is imperative to have our own financial focus and agenda.
These are three options you should have on hand to safeguard yourself against volatility:
It’s true when they said not to put all your eggs in one basket. Plenty of self-help financial books educate us on the importance of saving for a rainy day.
Many experts highlight the importance of expenditure to saving ratio of anywhere between 80:20 to 60:40, and this is a good ratio to follow.
But it is also important to take into consideration the currency that comes into play. In this sense, diversification of currencies would help to spread your risk net wider.
A government bond is issued by a national government and denominated in the country’s own currency. These bonds, which can also be held in a foreign currency, are also known as sovereign bonds.
These bonds have grown more popular over the last decade, usually guaranteeing returns higher than that of a fixed deposit for a longer term.
Typically providing potential investors with actual values, forecasts, historical data and statistics notwithstanding the economic situation and news allows for a more informed purchase.
While many are still debating on the volatility of commodities, historical data has shown that gold has held its ground in weathering any political or economical situation.
It is also interesting to note that gold and silver prices are usually inversely proportional to that of the U.S dollar. In light of last weeks’ turn of events, as the market regains ground to correct itself, the prices of commodities remain steady and is a safe haven for investors looking for long-term hedging options.
Diversifying our portfolio and strategizing our stance could very likely be the best option to gain financial traction in changing times.