4 Ideas for "Future-Proofing" Your Financial Portfolio

4 Ideas for “Future-Proofing” Your Financial Portfolio


Written by John Rothans

Apr 17, 2020

Future-proofing your financial portfolio is about more than picking stocks and watching the markets. You need to consider diversifying with assets (both traditional and alternative), accounting for inflation, and making legacy plans, among other actions. You need to consider “future-proofing” your portfolio.

What Is Future-Proofing?

As defined by the Principles of Future-Proofing website principlesoffutureproofing.com, the term refers to “the process of anticipating the future and developing methods of minimizing the negative effects while taking advantage of the positive effects.”

Future-proofing applies to products, services, technology, construction, education, and much more. But it also can apply to your portfolio.

Follow along as we outline four ideas for future-proofing your financial portfolio.

Monitor the Environment

To prepare for the future, you must track what’s happening in the present. Here are a few factors to consider:

  • How are the markets performing? Are they bullish or bearish?
  • How is the economy doing? Are we in a boom or bust period?
  • What is the geopolitical atmosphere like? Are trade tensions simmering or boiling over? Are we involved in a military situation that’s flaring up?

By keeping on top of the markets, the economy, and the geopolitical environment, you can be ready to add to or subtract from your portfolio and, ultimately, help to equip your portfolio for the future.

Consider Diversification

Remember the saying about not putting all your eggs in one basket? It’s especially relevant when it comes to your portfolio.

Portfolio diversification can help you take advantage of the upswings and weather the downswings.

As billionaire Warren Buffett famously said, “Be fearful when others are greedy and greedy when others are fearful.”

Diversifying your portfolio and rebalancing it when the time is right can be smart future-proofing moves.

Experts suggest allocating 10 to 25% of your portfolio toward tangible assets like gold and other precious metals. Your allocation depends in part on how future-proof you want or need your portfolio to be.

Here’s a sample portfolio. (Note that this is an example and should not be considered financial advice. Please consult a professional financial advisor before making any decisions regarding your portfolio.)

  • Stock and other equities—25%
  • Cash—20%
  • Precious metals—20%
  • Fixed-income assets—15%
  • Property—10%
  • Other—10%

Account for Inflation

Simply put, inflation—when prices of goods and services go up but spending power goes down—can take a bite out of your portfolio. During the 12-month period ending in March 2020, the annual inflation rate in the U.S. stood at 1.5%, compared with 2.3% in 2019 and 1.9% in 2018.

Fortunately, future-proofing your portfolio can help guard against inflation-inflicted harm.

How do you do that? You include hedges against inflation in your portfolio. Among these hedges are gold, growth stocks, and foreign bonds.

Gold can act as a hedge against inflation in part because its price is tied to the dollar. If the value of the dollar decreases as a result of inflation, the price of gold goes up. Therefore, the asset holder gains more dollars for each ounce of gold because of inflation.

Make Legacy Plans

Do you want to leave a legacy for your children and grandchildren? Gold can play a part in this by enabling you to pass along wealth to your heirs.

One attractive aspect of gold as a legacy builder involves its status as a physical asset. Kitco News cites bestselling author Jim Rickards as hailing gold as “the ultimate tool for wealth preservation.” Rickards’ research shows that gold has outperformed equities over the long term, delivering greater returns.

Why is gold so beneficial in terms of preserving wealth? There are two fundamental answers to this question:

Think about tomorrow today. Call U.S. Money Reserve for a free one-on-one consultation to learn how precious metals can help safeguard your future.


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