Even in the best economic environments, finding the right portfolio mix and seizing investment opportunities can be a tall task. When you throw economic turbulence into the mix, creating and maintaining the right portfolio for your goals can become even more difficult.
Whether you’re building your portfolio for the first time or looking for something to help you diversify, investing in the face of uncertainty can be as much a challenge as it is an opportunity. The biggest challenges when investing in uncertain times are both positive and negative. After all, necessity is the mother of innovation, and economic challenges may require some new thinking.
Here’s what you need to know about investing in the face of uncertainty. As scary as it may seem to put your hard-earned money into investments when volatility is on the horizon, there may be no better time to seize investment opportunities. Making sure you pick the right ones, however, can be one of the biggest challenges you’ll face.
Whether or not most investors want to admit it, it’s impossible to know exactly when to make or pull out on an investment. Although many of us would love the luxury of knowing when the next big financial swing is about to hit (or when a stock is about to surge in price), waiting to time the markets is a fool’s game.
The best time to invest is now. That’s true whether the markets are volatile, surging, or in a recession. There will always be ups and downs, which means you should follow your own personal investing goals and let those determine your next move. Waiting to get into a market when it hits its lowest point isn’t possible—there’s no way to tell when you might be able to get the best possible bargain through low stock prices. The same holds true for exiting at the top of a stock’s share price.
Investing despite uncertainty isn’t necessarily for the faint of heart: you’ll need to do your homework, spot out opportunities in sectors of the market that are seeing steady performance, and be willing to stomach some ups and downs. There are still opportunities out there for investors to make smart decisions when a bear market is in full swing. You just need to know where to look, and to have the patience needed to stay in it for the long haul.
If you’re looking to protect your assets against market fluctuations, there are several common options out there for keeping your money safe. Bonds are a perennial staple of an investor’s bear market portfolio. Moving assets into bonds can serve as a hedge against falling stock prices: even if bonds offer smaller returns than other kinds of securities, they come with more stability in terms of what they pay out and when.
There’s another way to make the most of investment uncertainty: buying the dip. Buying shares of a business or exchange-traded fund when its price is low can avail you to greater gains as conditions improve. Buying the dip is one of the central tenets of good investing, which is to buy low and sell high. This strategy may not be right for the faint of heart, but savvy investing means thinking rationally rather than emotionally.
Economic uncertainty and market volatility only provide investors with so many options on the stock market. General sluggishness on Wall Street can drag down entire sectors that may not have a hand in the reasons for a bear market. To truly maximize your investment opportunities, you may want to consider alternative investments—those that exist outside of the stock market.
Alternative investments can take several forms. Here are just a few of the many alternatives out there that could help you invest confidently in the face of uncertainty.
Investors flock to precious metals when the economy looks shaky, and for good reason. Gold is particularly well-suited for safeguarding assets during a recession, as its price tends to remain constant—or even rise—when investors are nervous about stock market outlooks. Incorporating gold or precious metals into your portfolio can help safeguard some of your investments while turbulence is in full force. And, if you’re lucky, you may even make a return on these holdings all the while.
Commodities are another popular option with investors who want to hedge against volatile market conditions—especially if inflation is on the rise. Buying commodity futures can help limit the amount of stock market exposure you have. Commodities tend to have stable prices, particularly during periods of inflation, as these goods are still in demand when other market conditions are rocky.
Real estate can be another common option for investors looking to pull money from the markets and into something a bit less uncertain. Purchasing real estate—either individually or by participating in a Real Estate Investment Trust—can help safeguard assets and even produce passive income. This can be a good option for investors who are comfortable with alternatives, and who are also unafraid of taking on a different kind of risk altogether: the risk that the real estate market can take a dive due to greater economic uncertainty.
Farmland investing may not be as commonly known as commodities, precious metals, or real estate investments, but there are plenty of reasons why it could fit in well within your portfolio. For starters, farmland value has a history of retaining value irrespective of broader economic conditions. Even as other kinds of real estate rise and fall, farmland value remains steady. When you invest in farmland, you also receive a portion of the profits made from the farm’s harvest as well, which means you’ll get passive income on top of your investment. In short, farmland investing gives you the best of several types of alternatives—all while mitigating risk and helping you pull money out of the market.
FarmTogether takes the mystery and guesswork out of farmland investing, offering investors a wide array of pre-vetted options designed to fit within any portfolio or strategy. Our team of seasoned experts can guide you through the process of finding the right investment opportunity to fit within your overall goals and comfort level. Investing with FarmTogether only requires $10,000, and getting set up only takes a matter of minutes.
Although making financial decisions in an uncertain market can be intimidating, there are ways to approach portfolio-building that can make the most of challenging times. The right mix of asset types, investments in certain sectors, and a finger on the pulse of economic news is an excellent start.
To truly make the most of your investment opportunities during shaky economic times, you’ll have to go beyond a boilerplate portfolio. This is where alternative investments, such as farmland investing, can help you explore new opportunities that aren’t closely tied to the ups and downs of Wall Street. FarmTogether makes it easy to incorporate farmland investing into your portfolio.
Disclaimer: FarmTogether is not a registered broker-dealer, investment adviser or investment manager. FarmTogether does not provide tax, legal or investment advice. This material has been prepared for informational and educational purposes only. You should consult your own tax, legal and investment advisors before engaging in any transaction.