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Avoiding Market Downturns with Alternative Assets

Published on August 8, 2017

We all know the stock market can be volatile; in mid-May the Dow Jones Industrial Average plummeted more than 370 points in a single day. Although the market recovered fairly quickly, bull markets give way to bear markets which means stock prices could decline again (by a lot).

This makes it so important to diversify your retirement portfolio as much as possible in order to not only survive but thrive financially. After all, your retirement years are counting on that!

Walter Updegrave, a former contributor to CNNMoney.com and a past editor at Money Magazine offers up some thoughts about how to protect your portfolio from a bear market.

Updegrave says to first check your asset allocation to make sure it aligns with your risk tolerance, which changes over time. Is your portfolio filled with risky stocks that expose you to too much potential loss during a market downturn? What are the current yields? How is the mix? Do the assets match up with your personal appetite for investment risk? Your trusted financial adviser can work with you to come up with the right risk-tolerance assessment for your particular situation (if you are investing in stocks and bonds). You might be due for a rebalancing of shares.

Next, he suggests cutting back on investments that you may have acquired in recent years but that no longer fit with your long-term investment strategy. What seemed like a great stock investment idea 10 years ago might not be a good fit for the current market or your interests.

Last, Updegrave says to write a letter to your future self, when the stock market might not be in bull mode any longer. He says this is to help you avoid reacting emotionally to market changes in the future (like bailing out of holdings in panic mode) by reminding yourself to diversify your investment holdings and to act with forethought and consideration.

Of course, we have our own ideas about all this as well. Open a self-directed retirement plan and include nontraditional investments for a more diverse retirement portfolio. By including non-publicly traded alternative assets, you can veer away from tumultuous stock market activity and control your future directly, with investments you already know and understand. These may include real estate, commodities, equity funding, precious metals and so much more. You can include these alternative assets in all types of retirement plans; these self-directed plans are administered by companies like Next Generation Trust Company. Our helpful professionals will also answer any questions you may have about the many options and benefits of self-direction as a retirement wealth-building strategy. Want to know more about preparing your portfolio for potential stormy days ahead? Read up about self-directed accounts in our white papers, or contact us at Info@NextGenerationTrust.com or 888.857.8058.

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