It may be human nature to flee from danger and rush to safety. But that instinct shouldn’t necessarily apply to your investments, as feelings don’t always equal facts.
True, events like the 2000 dot-com bubble burst or the 2008 market crash can be nerve-wrackingfor even the most confident investors. But it’s best not to make any rash decisions — eliminating an entire asset class from a portfolio,
for example — during times like these, says Rob Haworth, Senior Investment Strategist for The Private Client Reserve.
A better solution might be reducing exposure to a certain struggling asset class while maintaining portfolio diversity — then over time and as the market rebounds, slowly rebalancing that exposure until it’s back in line with original goals. Portfolio diversification and strategic adjustments become especially pertinent during tough economic times when short-term emotional decisions can have long-term financial consequences.
U.S. Bank concentrates on four capital markets — equities, fixed income, real estate and commodities — then leverages all types of appropriate asset categories within these four markets. Understanding how each specific asset class is potentially affected by market changes may help you make wise decisions about selecting investments and making adjustments when necessary.