How the Global Economy Impacts Your Personal Investments
People from all around the world hinge their future on money from their stock and bond portfolios. They use money from these portfolios to save for emergencies, and fund their retirement after their working years.
Many individuals worry about the performance of their portfolios, and the interconnected nature of the global economy only amplifies those worries. Instead of worrying, individuals who have investments need to see the two-sided nature of this international influence on their investments.
But, what about the recent correction?
“Trying to determine what the equity market is telling us right now is a bit tricky given the rally is coming off of a significant sell off. Is the rally simply a correction from an overdone sell off or is it an indication that economic growth is going to be better than expected?” explains Timothy Reilly of Hilton Capital Management.
“We believe the change in Fed policy has significantly reduced the chance of a near term recession, and thus the rally has been justified. However, we do feel global growth is slowing and this will present challenges for companies to grow and ultimately be a headwind for equities,” he continued.
The Global Economy Provides New Sources Of Wealth
One of the fundamental aspects of smart investing is diversification. Individuals need to diversify in order to reduce their risk and attachment to any one sector of the economy– but many investors also want to take advantage of new investment sources as much as possible.
The global economy is an example of both of these diversification strategies. International companies own the majority of the world’s wealth.
An international fund can take advantage of this wealth and use it to bolster an individual’s passive income. International funds can also reduce an individual’s attachment to the domestic economy. Some international funds perform quite well when the domestic economy slows down.
Companies may start to turn more towards international competitors if a domestic economy has trouble. An international investment can allow for one aspect of a person’s portfolio to rise while the others face trouble.
A wide variety of factors can cause a company’s stock price to go down. Many of these factors have nothing to do with the domestic economy or the success of a particular company–it’s the interconnectedness. For example, a military coup across the ocean can affect the performance of companies based in Iowa or Utah.
In many instances, individuals are guided not by the principles of personal finance but by these emotions in their day-to-day trades. It is nearly impossible for individuals to track every potentially relevant piece of information for investments from all around the globe.
Instead, they need to work with an investment management company to find wealth opportunities that are safe and shielded from the pressures of the global economy. These investments will allow individuals to ride through the frequent ups and downs of the stock market.
Capital Preservation, Less Risk
The Hilton Capital Management Tactical Income Strategy is one that ensures balance and capital preservation with little risk.
Tactical Income was created to give fixed income investors the opportunity to increase their potential returns in a tax efficient manner while not dramatically increasing their level of risk.