This week, I explore three key components beyond global equities that your Inner Technician can use to reduce risk, add stability, and even enhance real growth in your investment strategy.

Exposure to Credit Markets

Fixed-interest investments, including sovereign debt (such as UK gilts), public sector debt, and corporate bonds, are essential for adding stability to your portfolio.

Bonds function as loans that you, as an investor, provide at a fixed interest rate over a set term. While bonds might not retain their value in real terms, they offer the security of capital repayment at maturity, provided the issuer remains financially stable.

When incorporating bonds, pay close attention to the duration, credit rating, interest rate, and default risk. Diversification across different types of bonds and issuers is crucial to mitigating these risks.

Exposure to Currencies

Currency exposure can be a double-edged sword in portfolio construction. While trading currencies directly is complex and risky, managed currency funds offer a more controlled approach.

However, you probably already go beyond global equities with currency exposure in your equity portfolio, which can significantly impact your returns.

Some investments are denominated in foreign currencies such as US dollars, Euros, or Japanese Yen. However, even equities denominated in one currency may have operational exposure to other currencies.

Currency fluctuations influence dividend income and capital appreciation, making currency exposure an important consideration in portfolio construction.

Exposure to Alternative Investments

Alternative investments, including property funds, commodities, futures, options, and hedge funds, go beyond global equities and provide diversification that traditional equities and bonds might not offer.

These investments are often more complex and usually require the expertise of a professional manager to navigate effectively. However, their potential to reduce risk and improve returns – especially in low-yield environments – makes them valuable to a well-rounded portfolio.

Your Next Steps

Building a resilient portfolio that goes beyond global equities is crucial for an independent professional without the safety net of corporate benefits. Whether you choose to deepen your Inner Technician’s understanding and manage your investments yourself or enlist the help of a professional, the key is to ensure that your portfolio is diversified and aligned with your long-term goals.

Photo attribution

Photo by Simone Hutsch on Unsplash

Audio link

https://audio.com/jeremy_deedes/beyond-global-equities/

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I work with ambitious, family-oriented professionals transitioning to independent consultants to create a 3 to 5-year holistic plan so that they grow wealthy, make a difference and find meaning.

My clients are aged 35-50. They are in a long-term relationship with family and parents who are supportive but ageing. They wrestle with personal and financial responsibilities and dream of more control, wealth, time and purpose.

If this excites you, you are coachable, willing to change, and want to stop going around in circles, then find out more at jeremydeedes.com

Then, take your next step and explore your way forward with a Mapmaker, a one-off online coaching gig to help you decide your options, assess our compatibility, and determine whether we are the right fit. Mapmaker is excellent value, held in confidence and without further commitment.

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