Ask Your Advisor: How Can You Diversify Your Investments?

Financial Advisors

Welcome to Ask an Advisor. This is an advice column where real financial experts answer questions from real people. The topic can be anything in the financial world, from retirement to tax, wealth management, or even advice on advice.

It’s been a tough year and a half for investors. Runaway inflation in the first half of 2022 Soaring to 9.1%, the highest score in 40 years.This will force the Federal Reserve to raise not just his one but his 9th consecutive rate hike, moving from near zero in March 2022. almost 5% One year later, it’s the highest since 2007.

The result was a devastating blow to the stock market.Last year, the S&P 500, Nasdaq and Dow Jones each Worst year since 2008the S&P fell 19.4%.

But investors who ran into bonds for safety would be bitterly disappointed. Interest rates on bonds rose, but their prices plummeted. For example, the Barclays U.S. Aggregate Bond Index fell 13% by the end of 2022. worst year ever.

Where can investors seek relief? Wealth managers usually encourage their clients to diversify their assets, but how is that possible when both stocks and bonds seem to be suffering at the same time? Is there a way for investors to hedge their bets in today’s highly interconnected economy?

A tech specialist in New York tackled these questions and asked the experts for help.

Dear Advisors,

Is it possible to truly diversify your investments? It seems like all assets are connected these days and the latest interest rates can make them go up and down in value.

I’m a 36-year-old tech entrepreneur living in New York City, investing in both my retirement funds and my soon-to-be-launched startup. I have about $30,000 invested in his 401(k) and about $100,000 in index funds. I tried to diversify my index fund, investing 60% domestically and 40% internationally.

Should I do more to confuse it? Is that possible? It would be nice if a completely separate asset like Pokemon cards could act as a hedge, but in reality everything seems to be interconnected.

thanks in advance,

Chaos in Manhattan

And here’s what a financial advisor wrote:

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