How to protect your savings from a crash
Whereas we all agree on the importance of saving today in order to reap the benefits later, there has hardly ever been a clear-cut way of guaranteeing that these savings remain safe in the event of a market crash. Those of us who are risk averse prefer to deposit their savings in a fixed deposit account, earning interest at market rates or even below market rates. There are those who go an extra step and invest their savings in an investment option that gives a higher return without losing your savings.
Regardless of the means used to save, how do you protect your savings from a market crash?
Consult an investment expert
Before making an investment decision, ensure that you have sought some investment advice from an experienced and reputable investment expert. They will offer an expert’s opinion on where you can invest your savings based on your risk profile. The investment expert will assist in determining your risk profile based on your past investment decisions or using your personal traits which will help ascertain the most suitable investment option. A good investment expert will also inform you on the pros and cons of each option placing you in a position to make sound and informed investment decision
Diversify your investments
If you have a sizable amount of savings, you should not invest your money in one investment option. You should diversify your portfolio so as to reduce the risk of losing all your savings in case there is a market crash in one option. Choose investment options that will react differently to varying economic conditions. Since the economy is in a continuous cycle of inflation and deflation, you want some of your assets to appreciate during inflation while others gain during deflation.