How to protect your assets and profits in this market

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Jhe Covid-19 pandemic has affected us all in different ways. From work to family to finances, we were forced to adjust to a “new normal” that involved staying home, jumping on Zoom calls, doing puzzles and baking a ton of bread. sourdough.

It also probably changed the way you invested in the stock market. But change isn’t always a bad thing.

Although the past two years have been a wild ride, it has also been a time filled with opportunity for those willing to take calculated risks.

I hope you are a savvier and more nuanced investor than you were a year ago. After all, you invested and traded your hard-earned money during a once-in-a-lifetime pandemic.

It’s similar to the difference between your investing mindset today and when you started.

Knowledge comes through experience, and experience guides how you manage your portfolio. You grow, you learn, you do good and bad jobs, then you learn and you grow again.

The opportunities are there if you know where to look

So far, 2022 has been one massive swing after another for the stock market.

We have been entrenched in a rollercoaster trading environment as investors face furious waves of uncertainty.

The war between Russia and Ukraine has exacerbated market concerns and, after nearly a month of fighting, which resulted in numerous sanctions against Russia and its elite, millions of Ukrainian citizens forced to flee their country and the rising and higher price of oil – it seems to have reached an impasse.

Another main source of volatility this year has been the Fed’s plan to raise interest rates amid record inflation, although investors got some much-needed clarity last week after the bank’s latest policy meeting. central.

A hawkish Fed has led to a massive sell-off in tech over the past few months, and the Nasdaq is down about 11% year-to-date. High-flying growth stocks were apparently favored by value and cyclical stocks in sectors like banks and energy.

How to invest in 2022?

No matter what’s going on geopolitically or what kind of stocks you’re looking for, the best thing to do is to keep a cool head and stick to your long-term investing goals, because your investing style should always reflect these personal and individual goals.

So if you’ve recently thought about changing your portfolio, be sure to ask yourself questions such as: when do i plan to retire? Where do I want to retire? Do I have a debt that I need to repay? Do I want to buy a house? Should I save for my children’s college education? And so on.

There are many things you need to think about before changing or integrating a different investment strategy.

Keep reading. . .

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But no matter what you decide is better this year, always remember that investing is a personal journey. Your life, and where you see yourself in 10, 20, 30 years, should drive the decisions you make for your portfolio(s).

The Truth About Dividend-Paying Stocks

As we find ourselves grappling with continued market volatility, hedging against further losses is likely on many people’s minds.

This is where dividends can come in handy.

Dividends provide a unique insight into a company’s overall health and fundamentals, such as earnings, free cash flow, future growth, and the focus and effectiveness of the management team. If a dividend is able to grow steadily over time, it shows us that a company is on the right track.

This is a big reason why dividends can work for you. These simple dollar payments tell investors that a company is healthy and can competently manage its cash flow.

Another big reason why dividends are important is that they become essential during periods of low growth or recession. Not only can they provide a cushion for investors, but dividends can also provide relief during these times – you can pocket that extra cash if you need it, or save it up and use it for an emergency.

But the option to reinvest your dividend dollars is essential. By purchasing additional shares with the money you receive, you can grow your investments quickly and quietly. So when you retire, for example, you will have already generated a steady stream of income for yourself.

Dividends + Diversification = A Winning Combination

Now add diversification to the equation and your portfolio becomes even safer.

According to Merriam-Webster, diversification is “the act or practice of spreading investments among a variety of securities or classes of securities.” This strategy is one of the easiest ways to protect yourself when the market goes down or slows down.

In other words, don’t put all your eggs in one basket. Instead, spread the risk across stocks, bonds, mutual funds, ETFs and cash to ensure that you avoid having part of your investment portfolio(s) become too heavily weighted in a specific company or sector.

Dividends and diversification both offer a way to hedge against macro and microeconomic uncertainties. No matter what kind of market environment we find ourselves in, using these two will provide you with plenty of ways to increase your returns.

Identify today’s most promising stocks

Even with the uncertainty looming, there are still plenty of exciting opportunities for investors.

It makes sense to identify strong market trends and follow them for the long term.

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Good investment,

Madeleine Johnson
Stock market strategist

Madeleine writes the weekly personal finance newsletter Money Sense and manages the Zacks Income Investor portfolio.

¹ The results listed above are not (or may not be) representative of the performance of all selections made by the editors of the Zacks Investment Research newsletter and may represent the partial closing of a position.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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