Navigating Uncertainty: the 2025 Edition
Navigating Uncertainty: the 2025 Edition
Recent developments have caused investors to worry about market uncertainty, such as geopolitical conflicts in the Middle East and the Russia-Ukraine conflict, as well as seemingly unpredictable policies coming out of Washington DC. Investors do not like uncertainty. But there are smart ways to protect your money and still grow it. Here are three key steps to consider:
1. Diversify Your Portfolio Instead of Holding Concentrated Positions
In uncertain markets, putting all your money into one type of investment—like just stocks or just bonds—can be risky. A more balanced approach is to diversify between equities, fixed income and other asset classes. This helps reduce the impact of market swings and provides more stable returns.
Equities offer growth potential but can be volatile. Bonds provide income and stability, but long-term bonds are sensitive to interest rate changes. Precious metals act as a hedge against inflation and currency fluctuations, preserving value during economic uncertainty. Additionally, it provides diversification, often moving independently from equities and bonds, which helps reduce overall portfolio risk.
During the Global Financial Crisis, US stocks fell from its peak on 9 October 2007 to a low on 9 March 2009, a whopping -55.2%, before subsequently recovering. In contrast, during the same challenging times, global bonds delivered +2.5% returns.
By combining both, investors can benefit from growth potential while also having a cushion during downturns. Research shows that diversified portfolios tend to perform better over time and recover faster from market shocks.
Investors can consider further diversifying your portfolio by including other assets such as gold. Gold has long been a trusted investment during uncertain times. In 2025, it is proving its value again.
Gold prices have risen by more than 20% year-to-date. It has a low correlation with stocks and bonds, meaning it often moves differently than other assets. A lower correlation means gold will be less likely to move in the same direction at the same time as stocks and bonds, which then reduces the fluctuations in your portfolio’s value and giving you a smoother ride over time.
Tip: Avoid concentrated bets. A mix of equities, bonds and other asset classes creates a more resilient portfolio that can handle uncertainty better.
2. Incorporate Passive Income in Your Portfolio to Bring Stability
In a volatile market, where prices can swing wildly from day to day, passive income offers something rare: predictability. It provides a steady stream of earnings that doesn’t depend on selling assets or timing the market.
Consistent Cash Flow
Passive income sources—like dividends, bond interest, or rental income—deliver regular payments. This means you can:
- Cover living expenses without dipping into your capital.
- Reinvest the income to grow your portfolio.
- Stay invested during downturns instead of selling at a loss.
For example, a portfolio with a 4% annual yield on a $60,000 investment can generate $2,400 per year in income, or $200 per month.
Reduces Emotional Investing
When markets fall, investors often panic and sell. But if you’re receiving steady income, you’re less likely to panic as you are still receiving a payout. This helps you stay focused on long-term goals.
Supports Financial Independence
Passive income can supplement or even replace earned income. For retirees or those seeking early financial freedom, this is crucial. It allows you to live off your investments without needing to sell them.
Diversifies Return Sources
Instead of relying only on capital gains (which are unpredictable), passive income adds another layer of return. This makes your overall portfolio performance more balanced and less dependent on market timing.
Examples of passive income assets that you can consider are government and corporate bonds, preferred shares, dividend-paying stocks and Real Estate Investment Trusts (REITs).
Tip: If you prefer more stability, you can consider investing more of your portfolio into passive income instruments.
Summing Up
In today’s uncertain world, smart investing is about balance—not bold bets. Here’s a quick recap of the steps you can consider:
- Diversify beyond just stocks and bonds to reduce risk.
- Add gold to protect your portfolio and improve resilience.
- Earn passive income for steady returns, even in tough times.
By following these steps, you can build a portfolio that’s ready for whatever the future brings.
Here are some investment options you can explore today:
- Unit trusts: Benefit from active management by experienced fund managers, whose focus, skill and resources are important assets amid challenging markets. On top of that, you can instantly access a diversified portfolio with a single transaction. Not sure where to begin? Invest in our quarterly top fund ideas that have been carefully selected by our investment experts.
- RoboInvest Income Portfolio: Earn a projected dividend payout of 5.79% p.a.* with a well-diversified portfolio. The portfolio actively allocates to, and within, different asset classes and geographies based on the team’s fundamental views. Rebalancing is performed on a quarterly basis to ensure optimal risk exposure.
- Gold: Instead of buying physical gold bars, go paperless. Issued paper bullion holds the same value as physical gold. No custody or storage fees will be incurred.
Grow your wealth with OCBC today
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*Bloomberg, as of end-June 2025. This projected dividend yield is calculated using the average dividend yield of the portfolio in the last 6 months and is meant for illustrative purposes only. Past performance of the portfolio is not indicative of future performance.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
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