How to protect my investment portfolio in a crisis
Every portfolio is personalized and should be tailored for every individuals needs and investing timeline. When someone is near retirement the portfolio should include zero risk assets. On the other hand when someone is starting investing more risk can be taken on. As I have discussed previously the first investment you should have is a 3 to 6 months of expenses saved up and ready on hand. This money will be useful in situations like the one we currently live on. Medical expenses, emergency home repairs and even daily expenses in case of job loss is what that this money is for. If you are certain that the above are covered then we can move on. If not maybe it is a good time to start liquidating any winning investments to create your emergency fund, if your job seems insecure gather up to 12 months as instructed by some advisors, while minimizing your expenses, something rather easy at the time being.
So what should we to do to protect our diversified portfolio? Nothing.
At these times the best thing is to do nothing at all. No buying because a stock seems cheap, no selling because your stocks trade at a loss and no re-balancing for “safer” investment. No buying gold through Revolut. Nothing! The chances are you will not beat the market with any genius move. We are here for the long run. We have planned ahead our roadmap and portfolio allocation percentages and we will stick to it. In my case the majority of my portfolio will be allocated in stocks eventually. And I will continue buying but currently I am pushing back the dates of my monthly buys. One thing although I am trying to do is hedge against the Euro so when the EUR is high against the USD I will be buying. It seems currently that the USD look like a safe haven for the rest of the world so it is becoming more expensive to own, but do not be fooled, the US economy has not been hit yet hard. Towards the end of my free trades of the month from Revolut I will be deploying those collected USDs to the stock market. In my opinion and from what I researched from articles, news etc the bottom is not here yet. So more losses could be coming and I will be probably conservative in my next purchases taking into account that the US are becoming a virus hotspot and the effects are not clear yet there. The statistics from China and Italy-Spain shows that things will get a lot worse before it stabilize and this will take weeks as we are still seeing exponential growth. And unfortunately USA is still on the beginning of that road. Any news about financial bazookas and armor piercing economic decisions are premature until we see the whole story unfold.
Keep safe and healthy.