Building a strong investment portfolio takes hard work, planning, and financial risk. Preserving your capital can help ensure your investments are secure over time and minimize losses. While market volatility is normal, using strategies to protect your assets is always a great idea. Implementing asset protection strategies allows you to buffer potential losses and keep consistency or maximize profits. Here are five capital preservation techniques for your portfolio.
Purchase Put Options
A put option, or “put,” is an agreement allowing the buyer to sell your investment at a predetermined price within a specified period. A put will increase in value as the price of the security decreases. Investors will use this method as a form of protection to ensure that losses don’t progress over a certain amount.
Diversify Your Portfolio
Have you ever heard the saying, “Don’t put all your eggs in one basket”? One of the best ways to preserve your capital for your portfolio is to diversify it. Having different types of investments can reduce the chance of unsystematic risk. Therefore, you don’t have to worry about the rest if one investment goes down. Stock up your portfolio with different types of investments to also grant you access to better opportunities.
Re-Evaluate Your Assets
Sometimes, the best thing you can do is re-evaluate your portfolio and find investments that align with you or your goals. Doing so lets you catch patterns and sell your stock before things decrease further. The re-evaluation process also gives you time to find other potential investments and network with more investors. Revisiting your collection of assets at least once or twice a year can help you make smarter financial decisions.
Consider Investing in Dividends
Investing in dividend-paying stocks is a great way to protect your portfolio and grant you longevity. Dividends help lower the risk you may face when the stock market falls—acting like a cushion. These investment options are also beneficial to add to your portfolio because they tend to grow earnings faster, which can lead to higher share prices.
Add Non-Correlating Assets
The risk is always present whether you’re investing in properties, businesses, or stocks. However, you can reduce the chances of risk by adding non-correlating assets to your portfolio. Things you can add are commodities, currencies, bonds, and more. By adding non-correlating assets, you’re also boosting the worth of your portfolio. This boost can grant you access to more investing opportunities and loans.
We hope these five capital preservation techniques for your portfolio help keep your investments intact. At Val-Chris, we understand the complexity of investing and are here to help you along the way. We offer trust deed investment loans for those who want to expand their portfolio. Our team will work with you, pointing you in the right direction for a successful investing opportunity. Contact us today for more information.