Why it is important to stress test your portfolio

With so much talk about stagflation, inflation, stock market bubbles, the Covid-19 pandemic and the supply chain crunch, investors have every right to feel jittery these days. And as central banks start preparing to withdraw their pandemic stimulus measures, now is the time to put your investment portfolio through a stress test to help protect your financial future. Taking steps to shield your portfolio from market forces should be done at least once a year, experts say.

 

While nobody can accurately predict when a crisis may happen, the best way to protect your investments is to globally diversify your portfolio across a spread of assets. This means not putting all your eggs in one basket and diversifying it across a range of assets, including commodities, government bonds, property and equities. The idea behind this is if one asset performs poorly, the others can offset this, experts say.

 

But what are the red flags and how do you position your portfolio to hedge against market threats?

Host Felicity Glover is joined by Stuart Ritchie, director of wealth advice at AES International, who takes us through the steps of stress testing our investment portfolios.

 

Hosted by Felicity Glover

Produced by Arthur Eddyson and Ayesha Khan