Diversify and rebalance your portfolio
The market mood has soured after US President Donald Trump announced a 25 percent tariff on Indian goods, effective August 1. Additionally, he unveiled plans to impose a penalty targeting India for purchasing energy and military equipment from Russia. While the markets managed a robust rebound on Thursday, the newly imposed tariffs are expected to weigh on investor sentiment and could continue to cloud the market outlook in the coming days.
As political tides shift and headlines signal volatility many investors wonder: How can I shield my portfolio from uncertainty? The answer begins with smart diversification, and having timeless assets like gold in the portfolio.
Diversification
A diversified portfolio spreads investments across different asset classes ranging from equities, bonds, gold, silver, real estate as well as some exposure in the international markets.
Equities are important in your portfolio as it gives inflation-beating returns. Therefore the best way to manage equities is to choose a mix of large-cap, mid-cap, small cap as well as have some exposure in international stocks. Don’t put all your bets on a single region or sector.
Quality bonds offer a buffer against stock market swings. Government and corporate bonds act as stabilisers in rough markets and can give return up to 11-12%. Similarly, real estate and even commodities like silver can perform independently of equity markets, providing valuable hedges. Moreover, consider currency-hedged international funds to maintain exposure abroad, reducing the impact of currency or tariff-driven shocks.
Don’t forget that regular portfolio rebalancing ensures you don’t get overweight in assets that have surged while ignoring others that can cushion a fall. For instance, suppose your target is to keep 60% of your portfolio in equities. If a strong market causes your equity holdings to rise to 75%, you should transfer some funds from stocks into other asset classes to restore your equity allocation to 60%. Conversely, if a market downturn causes equities to shrink to 50% of your portfolio, you would shift money from more conservative investments back into stocks to bring the allocation up to your target of 60%.
The Case for Gold
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Gold shines as a traditional safe haven. Its unique qualities such as scarcity, liquidity, resistance to inflation, and zero credit risk make it a natural hedge against market turmoil triggered by sudden policy moves or trade wars.
Central banks worldwide are boosting gold reserves, signaling its role during times of geopolitical and monetary stress. How much gold? Experts suggest 10–15% of your portfolio in gold is prudent. This portion helps balance risk and limits drawdowns during times when stocks and currencies falter.
Gold is uncorrelated with both equities and bonds, which means it often zig-zags when other assets zig, softening extreme moves in your overall portfolio.
The best investment strategy isn’t about running from risk, but building resilience for any political or economic storm. Diversify broadly, maintain exposure to gold, include global and non-correlated assets, and review your plan regularly. By doing so, you’ll give yourself the best odds of not just surviving but thriving no matter what political changes lie ahead.