There is a new survey out that was done by Bank of America/Merrill Lynch that shows just how leery investment professionals are with the current market.
Leery is a mild term to what these investment professionals are actually feeling. A significant amount of investment professionals are simply terrified.
What things are they worried about? They are worried about geopolitical events such as the Middle East and Russia. They are also worried about interest rates. Many investment professionals believe that the Feds will start hiking rates before June of next year. Those two issues alone spell a bit of disaster to the stock market.
Something I found even more shocking was the fact that not only are they terrified but their portfolio management isn't even matching how they are feeling. The survey shows that they are raising the percentage of his or her portfolio held in cash. That is fine, but the real issue is that they are still heavily holding onto stocks and are holding more than their attitude would dictate. They also don't hold such a small minute percent in their portfolio of bonds.
Is a portfolio that is heavy into stocks, carries no bonds and that is raising its cash reserves really the best way to position your portfolio against a crash? I think not but to each their own.
What can you do to make sure your retirement portfolio is ready for anything that a changing market can throw at it?
1- Find out the basics of your portfolio. What are invested in?
2- Diversify that portfolio. Once you know what you are invested in then you can start doing the things that are fun. Invest in things other than the stock market. I'm not suggesting to take everything out of the stock market nor am I suggesting to invest in all bonds but what I am suggesting is to have a diverse portfolio. Invest some in the stock market, some in bonds and even some into alternative investments. Alternative investments through an IRA are a great way to diversify your portfolio. Those alternative investments could include real estate, gold or private business. Investing in non-traditional investments with your IRA or 401k is quite easy. The great thing is that all of your investments are tax free so you can invest in a rental property and get the tax benefits that come with the IRA or 401k.
3- Sit back and relax because you can't do much else. Once you have done your own due diligence to ensure a great retirement portfolio that is diversified for your situation and for any situation the market may throw at it then it is time to relax.
The reality is that we don't know what is going to happen in the future with the stock market and markets in general. We know investment professionals are very nervous about what may happen. The thing we need to do is do our own due diligence and make sure that our portfolios are invested in what we want and are diversified enough to be able to withstand any market issues. Whether it be the housing market, stock market or what have you.
What is your opinion about the market are we destined for a big crash in the near future? What things are you doing to ensure your portfolio is able to withstand any strom that may come its way?
Author: Nick Barker