Given the concerns about tariffs, inflation, and the economy, we may see some instability in the financial markets.
As an investor, how can you cope?
Your best strategy can be summed up in one word: diversification.
It can’t guarantee profits or prevent all losses, but it can help you manage risk and market fluctuations.
Here’s why: Different types of financial assets can move in different directions at any given time - so, stocks may be up while bonds are down, or vice versa.
If you owned both these types of assets and others besides, your portfolio would likely fare better than if you only owned one type of asset and that asset was affected by a market downturn.
You can even diversify within individual assets.
For example, you can find several different types of stocks, including domestic, international, large company, and small company.
And you can diversify your bonds by owning long-term and short-term ones.
How you diversify your portfolio will depend on your own risk tolerance, time horizon, and financial goals - but however you do it, diversification should always be a driving force behind your investment strategy.
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor John Dickerson and Hawes Dickerson. Members SIPC.
