Seems things going at warp speed in Washington! Everyday something new is happening every hour. What seemed clear yesterday is foggy today. On other items, in the fog yesterday clearing today, but maybe back in the fog tomorrow. All of this uncertainty, especially around tariffs, have the financial markets on a very fast roller coaster and likely has you wondering what to do.
DON'T PANIC!
Your financial advisor likely has you diversified, and more importantly, has aligned your allocation with your financial plan.
But if you are not working with an advisor, these are some moves you can make.
Diversify Your Investments
- Why? If tariffs hurt certain industries (like tech, auto, or agriculture), having a mix of stocks from different sectors can help protect your portfolio.
- How? Consider adding investments in healthcare, utilities, or consumer staples—sectors that are less affected by tariffs.
2. Look at Safe-Haven Assets
- Why? When the market becomes unstable, investors often turn to assets like gold, bonds, or cash to reduce risk.
- How? You might move a small portion of your portfolio into gold ETFs, U.S. Treasury bonds, or money market funds.
3. Focus on Domestic Companies
- Why? Businesses that don’t rely on foreign imports or exports may be safer from tariff effects.
- How? Consider stocks in companies that manufacture and sell their products mostly in the U.S., such as regional banks, local utilities, or domestic retailers.
4. Stay Away From Highly Affected Sectors
- Why? Industries like tech, auto, and agriculture tend to get hit hardest by tariffs.
- How? If you own stocks in these areas, you may want to reduce your holdings or be ready for volatility.
5. Consider Dividend Stocks
- Why? Stocks that pay dividends can provide steady income even if stock prices drop.
- How? Look for well-established companies in sectors like healthcare, utilities, or consumer goods that consistently pay dividends.
6. Keep Some Cash on Hand
- Why? If the market takes a big dip due to tariffs, having extra cash allows you to buy good stocks at a discount.
- How? Hold a small percentage of your portfolio in cash or short-term investments for flexibility.
7. Stay Patient and Avoid Emotional Decisions
- Why? Market volatility caused by tariffs is often temporary, and stocks usually recover over time.
- How? Keep a long-term perspective, review your portfolio regularly, and don’t panic-sell based on short-term news.