Over the past few months, the stock market has experienced significant fluctuations, leaving many investors and those nearing retirement uneasy about their financial future. Factors such as geopolitical tensions, rising inflation, and shifts in interest rates contribute to this uncertainty, highlighting the need for strategic wealth preservation.
At NJM Wealth Preservation Strategies, we recognize the unique challenges individuals face approaching retirement. In this blog, we'll explore practical strategies to help safeguard your wealth against market volatility, preparing you for a more secure and comfortable future.
Understanding the Current Market Landscape
The stock market has experienced substantial volatility recently. The S&P 500 has entered bear market territory, declining over 20% from its February peak, primarily due to the imposition of new tariffs by the U.S. administration.
These market fluctuations have been driven by escalating trade tensions, particularly between the U.S. and China. The U.S. announced sweeping tariffs, leading to retaliatory measures from China, including a 34% duty on U.S. goods effective April 10.
Uncertainty in the market can have a pronounced effect on investors, especially those who are risk-averse or nearing retirement. For affluent individuals, the stakes are even greater, as the potential for significant financial loss can affect their retirement plans and legacy.
One of the most fundamental ways to help protect your wealth in uncertain times is through diversification. This involves spreading your investments across different asset classes rather than concentrating too much wealth in one area.
Holding a mix of investments can help reduce the risk that a downturn in one asset class will significantly impact your overall portfolio.
Key Benefits of Diversification:
In light of current market conditions, safe-haven assets like gold have seen increased attention. April 11, 2025, SPDR Gold Shares (GLD) closed at $297.93, marking a new all-time high for the ETF. This represents a significant rebound from its April 7 close of $273.71, which was down 2.15% from the previous session.
The surge in GLD's price aligns with a broader rally in gold, driven by heightened investor demand for safe-haven assets amid ongoing U.S. tariff uncertainties. Spot gold prices rose by 0.5% to $3,226.24 per ounce on April 15, 2025, approaching Monday’s record high of $3,245.42.
This upward trend in gold and GLD reflects market concerns over potential tariffs on pharmaceuticals and semiconductors, contributing to economic uncertainty and increased demand for defensive assets.
These investments tend to perform well when equities decline, making them a potentially useful tool to help protect your wealth during a downturn.
Gold, in particular, is often viewed as a store of value during times of economic instability. Its performance typically inversely correlates with the stock market, offering a level of protection. However, it's essential to be aware of potential risks, as gold prices can be volatile. Additionally, cash remains the safest short-term asset but lacks the benefit of appreciating during downturns.
Given the Federal Reserve's recent decisions to hold interest rates steady amid inflation concerns, high-yield savings accounts and long-term CDs may offer more attractive returns compared to the fluctuating stock market. For instance, as of April 15, 2025, the average interest rate for a 30-year fixed mortgage is 6.85%, indicating a relatively high-interest environment.
Allocating a portion of your assets to these vehicles can help offer liquidity and earn a predictable return, providing a buffer during times when the stock market might not be performing well.
Hedging is a strategy used by sophisticated investors to help reduce potential losses in a portfolio. In simple terms, hedging involves taking an offsetting position in an asset to help balance out risks. There are several ways to hedge against stock market declines:
With the current market downturn, investors are increasingly considering hedging strategies. Inverse ETFs, for example, which are designed to perform inversely to a given index, have gained popularity as a method to hedge against declining markets. However, these instruments come with their own set of risks and should be approached with caution.
While these strategies can be complex and are typically used by institutional investors, they can be tailored to suit individual portfolios with the right level of risk management. That’s why, it's crucial to understand that hedging comes with its own risks, and it’s always important to consult a trusted financial professional to determine the best course of action.
For high-net-worth individuals, tax efficiency is a crucial component of wealth preservation. Minimizing your tax burden in uncertain markets can help ensure that your wealth remains intact, even if market fluctuations create challenges.
Tax-efficient strategies such as tax-advantaged accounts, including IRAs and 401(k)s, as well as tax-deferred growth vehicles like annuities, may provide significant long-term benefits. Consulting with a financial professional can help you determine the best strategy for minimizing taxes while ensuring your investments work for your future.
Today's uncertainty in the stock market makes it all the more important to work with an experienced financial advisor who understands your unique financial situation. A trusted advisor can help tailor a strategy that aligns with your financial goals and risk tolerance while guiding you during market volatility.
At NJM Wealth Preservation Strategies, we are dedicated to assisting individuals approaching retirement in exploring ways to help protect and manage their wealth. Our team prioritizes long-term relationships, taking the time to understand each client’s unique financial situation and offering educational resources and personalized insights to support their financial goals.
The recent imposition of tariffs and the ensuing trade tensions have introduced significant volatility into the financial markets. Investors, particularly those nearing retirement, should reassess their portfolios in light of these developments. Diversification, consideration of safe-haven assets, and consultation with financial professionals are crucial steps in navigating this uncertain environment.
For personalized guidance tailored to the current economic climate, consider reaching out to a financial advisor who can provide insights specific to your financial situation and goals.
At NJM Wealth Preservation Strategies, we recognize the challenges of managing wealth in unpredictable markets. Our goal is to help individuals explore strategies that help protect their financial well-being and navigate market fluctuations with greater confidence. By taking informed steps today, you can work toward a more secure financial future.
Market downturns can be unsettling, but making drastic changes to your portfolio may not always be the best approach. Some investors choose to maintain a well-diversified portfolio, keep liquid assets for short-term needs, and periodically review their financial strategy to help navigate volatility.
Cash can serve as a financial cushion during uncertain times, offering liquidity and stability. While it typically does not provide high returns, some individuals allocate a portion of their assets to cash or cash-equivalent accounts (such as money market funds or high-yield savings accounts) to cover short-term expenses and avoid selling investments during downturns.
Inflation reduces purchasing power over time, meaning that the same amount of money today may not afford the same standard of living in the future. Some individuals explore options such as investing in assets that historically outpace inflation, maintaining tax efficiency, or considering inflation-protected financial products as part of their broader strategy.
Annuities can help provide a predictable income stream, which some retirees find beneficial. However, they come with varying terms, fees, and structures. Those considering annuities may wish to evaluate the terms carefully and consult with a trusted financial professional to determine if they align with their long-term goals.
Periodic financial check-ins, such as annually or after major life changes, can help individuals assess whether their strategy still aligns with their goals. Because market conditions, tax laws, and personal circumstances change, some people choose to work with financial professionals to review their options.
The content provided in this blog is for informational purposes only and should not be considered financial, investment, legal, or tax advice. NJM Wealth Preservation Strategies does not provide investment advisory services and does not recommend or endorse specific securities or financial products.