Smart Strategies For Protecting Your Investments

Posted on Jan 24 2016 - 11:45am by Editorial Staff

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Protecting your investments should be a primary concern for you if you choose to invest your money. Many things could go wrong and cause you to suffer a loss if you aren’t careful. It’s not possible to remove all risk from your investment portfolio. But you can take some measures to protect yourself. Making a few smart choices can stop you from losing cash, engaging in risky behaviors and perhaps even being cheated by a company. There are several strategies you can use if you want to protect your investments. Read on to find out just some of the ones you can use below.

Diversify Your Portfolio

Most experts will recommend diversifying your portfolio to help protect it. They will tell you that a diverse portfolio will do better than one that is concentrated in one area. Instead of focusing on one type of asset, you can try to spread your investments. Consider looking at both physical assets and cash investments. Your portfolio may end up more balanced, and a loss in one area can even out with gains in another. It reduces unsystematic risk, which is related to investing in a particular company. Look into branching out if you want to use this method of portfolio protection.

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Sell When You Hit Your Target

Setting a goal for when you want to sell an asset is a common and smart tactic. However, people sometimes reach their target and don’t sell. Sometimes this is because they wish to have something else to invest in. But you don’t need to wait for another opportunity to move on from a current one. It’s better to sell when you hit your target than it is to hold onto an asset that might start depreciating. Many investors use stop losses to ensure that they don’t suffer too much damage from their investments. You can use a hard stop when a sale is triggered at a fixed price. Another option is to use a trailing stop, which moves with the stock price.

Invest in Dividends

Some investors choose to invest in stocks that pay dividends as a form of protection. This method can be a useful one, providing a cushion to help reduce risk. It’s a good idea to have those dividends coming in, even when stock prices are falling. You can also find the companies with higher dividends grow their earnings faster than others. This type of investment can help to protect you against inflation too.

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Seek Legal Counsel

It’s not always possible to protect your investments or predict a problem. Sometimes you lose money through no fault of your own. Securities class actions are on the rise. Investors who suffer a loss due to the issue are keen to seek legal representation. If it happens to you, you should get legal counsel from an attorney such as Martin Chitwood, who is a partner in a firm specializing in the issue.

It’s better to take steps to protect your portfolio than to deal with the consequences of not doing it. However, everyone will find different methods that suit them.

About the Author

Editorial Staff at I2Mag is a team of subject experts.