Cents For Sense Blog | 5 Changes You Need to Make to Your Investment Strategy in 2021 | Talkmarkets

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5 Changes You Need to Make to Your Investment Strategy in 2021

Date: Thursday, April 8, 2021 5:51 PM EDT

With the new year finally here, there’s hope on the horizon that good news will come with it. However, there’s also no way of knowing for sure what 2021 has in store for the stock market. 

While it’s entirely possible that stock prices may hold steady in the new year, the possibility of a market crash or worse cannot be ignored either.

Especially in the uncertain times we live in now, your overarching strategy for 2021 should be to prepare for all realistic possible scenarios. In this article, we’ll explore the top five changes you can make to your investment strategy early this year to make that happen. 

Business, Stock, Finance, Market, Financial

Image Source: Pixabay

  1. Stay as diversified as possible

Diversification is the best strategy for avoiding a total portfolio failure. Even if one industry you are invested in suffers due to the economic climate, being diversified into different and uncorrelated industries as well may save you.

To protect against potential volatility and stay diversified, ensure that you are invested in a number of different market segments. Taking this concept further, allocate your assets appropriately for who you are. If you’re in your twenties or thirties, you can afford to take on more risk and correlation within your portfolio. However, someone close to retirement may wish to further diversify their risk this year.

Consider the fact that by the time the average investor reacts to the market, most of the damage is already done. Unless you’re a professional investor, you probably won’t beat the market. Keeping your portfolio diversified, both in domestic stocks and broader assets (such as bonds or foreign stocks) will help protect you from unforeseen stock market volatility in the new year.

  1. Don’t overwhelm yourself

Assuming you are a beginner investor, it’s best not to overwhelm yourself in the new year. Following the pandemic, it will be difficult to predict exactly which companies or sectors will perform well. Investing in accounting software that can help you keep track of your investments is crucial. You should also consider investing in an exchange-traded fund (ETF) as well.

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