Broadview Financials Online financial Consultant
How to sustain gains and limit losses when investing in the stock market.
Diversifying money invested is the most common way of hedging, and protecting capital gains earned during highly volatile market periods, or bear markets.
Your money is the life blood of your finances. You work very hard and put in a lot of time to earn it. The least and last thing you want is to purchase a investment to have it depreciate in value, and have money sitting in an asset that could turn south before returning to appreciated value. What's the use of having an investment if you claim no cash in return.
This is why most financial advisors highly recommend diversifying money invested - typically 80% in stocks, and 20% in bonds. Diversification can be done in a couple of ways. One way is to simply self manage by buying assets with solid and good growth fundamentals that has seen a depreciation in stock price due to heavy and consistent buy and selling in the stock market. Hold them until they return to appreciated value and take some money off the table and move it into other depreciated assets that has solid growth potential however this can be a more highly sophisticated strategy and very risky to unskilled investors.
Another option would be to purchase a diversified mutual fund, or index fund. These funds normally contain diversified investments such as stocks, bonds, and commodities.. You can purchase a manage fund or unmanaged fund.