Recently, stock markets have been highly volatile due to the escalating COVID-19 outbreak and plummeting oil prices.

During this time, investors can consider building a safety net by employing strategies which seek to preserve your investment capital. The focus is on trying to protect what you already have while gaining some potential returns and growth. This strategy is designed to give peace of mind as a portion of your portfolio is exposed to lower risk.

For clients who are nervous about current market conditions, you do not need to feel obliged to leave your money in high risk investments.

You can consider reducing the risk of your portfolio by divesting a portion in short-term securities like money market securities or ultra-short duration fixed income securities.

This can prevent your entire portfolio getting whipsawed by volatile markets. Another benefit of maintaining a portion of your portfolio into investments with high liquidity is to keep dry powder so you can rebalance your portfolio when the market shows signs of recovery. One of the ways for investors to do this is to increase your allocation to money market funds or ultra-short duration funds.