Defensive investing is a strategy mainly employed on established and stable stocks
. It"s a term which basically means that you"re employing a low risk and low reward strategy. These types of investable stocks are much less volatile than usual and thus you"re guaranteed a return in a few years time. There are both benefits and negatives when it comes to defensive investing. Hopefully this article clears up any doubt.
To start with, the main goal of defensive investing is to have a solid approach which works well in all investments environments. This approach is meant to work whether the market is up, down or sideways. The main objectives are to reduce volatility, take any emotion out of investing, deliver a good return and cut out any risk of losses.
One of the first benefits you"ll notice when it comes to defensive investing is that they perform much better when the economy is in a recession. Companies like Select Global are Market Leaders in global commodities and educate investors in current investments. Advice can become particularly effective when the economy is in a recession.
The biggest challenge in defensive investing is picking the right commodity wisely. Money managers like Select Global will work with you and ensure that many things are handled. The benefits to having these advisors are that they have a lot of experience in the marketplace and they usually have a flexible approach to the asset allocation while managing risk.
Below are some tips which you can use to improve your strategy and cut down on the risk.
"Buy + Sell Slow "" With defensive investing you should always be looking to slowly test the waters and ensure that what you"re doing is right before diving in. You should never buy or sell a specific position you have all at once. So if a stock looks really weak you should slowly buy into it rather than use all of your money and pile it in.
"Always Diversify "" Many experts advise you not to have over 20% of your portfolio in a single sector. This also means avoiding similar stocks which could both be affected. Many investors have lost a lot of money in the past by piling all of their money into hot markets that fizzled out quickly!
Overall defensive investing can be challenging due to the fact it takes a lot of patience and a wrong choice could set you back quite a while. If you"re new then it would be advisable to take expert advice from companies such as Select Global so you can make much more informed decisions and have a lot of it managed.