Financial security has increasingly been at the forefront of many Americans’ minds over the past year. Unexpected events and sustained economic damage have caught many people off guard. While recovery is percolating on many levels, there is still evidence of the damage done that has placed many people into precarious positions, which underscores the importance of protecting your financial portfolio.
Only 39% of Americans can pay a surprise $1,000 bill.
This number comes from Bankrate’s January Financial Security Index, reported by Fox Business on January 12, 2021. Bankrate.com chief financial analyst Greg McBride said, “The precarious state of Americans’ emergency savings has been further set back by the pandemic, with nearly as many needing to borrow to cover a $1,000 unplanned expense as those that can pay for it from savings.”
This reflects the trouble many are facing after economic downturns, even during a period of recovery. Unfortunately, many may see further trouble down the line.
Jobless claims remain elevated even in recovery.
A major part of Americans’ financial woes comes from the trouble the labor market is still facing. Ann Elizabeth Konkel, economist at Indeed Hiring Lab, told reporters for The Wall Street Journal, “COVID hasn’t let up, and it’s still creating massive amounts of economic havoc,” on January 21. This trouble is also reflected by business closures.
Retail closures in the upcoming year are expected to continue to be elevated. Coresight Research predicts that as many as 10,000 stores could close in the U.S. in 2021. These closures are part of a broader issue with the economy. Other businesses could still face closures and layoffs, particularly in vulnerable industries such as transportation and energy.
Facts such as these emphasize the importance of protecting your portfolio.
People have insurance for their health, their homes, and their cars. Doesn’t it make sense to have insurance for your wealth? While many have relied on the stock market recovery for gains, this may not be a perfect system. The Financial Times reported that the stock market ended its worst week since October 2020 on January 29. Swings and bouts of volatility—and even crashes—are worth hedging against. Having a hedge in your portfolio, such as precious metals, could help act as your wealth insurance. With a proven record of performance over the long term, these assets can make for an ideal addition to any well-diversified portfolio’s mix.
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