Financial moves to help you survive and thrive during troubled times
Admit it: you’ve been a little worried lately.
About the economy. The stock market. Tariffs. Inflation and interest rates. About rising government debt. Or the prices of gas, housing, groceries and pretty much everything else. About all of the conflict in the world – political, economic or otherwise.
Most of all, you’ve been concerned about what all of these things might mean to your portfolio and, by extension, your ability to secure a long, happy, financially secure retirement.
You’re certainly not alone. When each new day brings new headlines about an uptick in unemployment or a worsening trade dispute or a new war in some far-off part of the world, it’s tough to stay resilient and optimistic about the future. And it’s even tougher for our portfolios to stay resilient; the constant stream of worrisome news has taken its toll on stock and bond markets around the globe, as economies and businesses try to adjust to a more unruly world order.
While there’s no way for us to stop crises from happening, there is a way to build a portfolio that’s more resilient to them: one that’s sturdy in the face of market meltdowns, less affected by economic emergencies, and which shrugs off political turmoil as if it’s no big deal. And you don’t need to be a professional money manager or a PhD in finance to build it. What you need is a set of well-planned, strategic financial moves that can protect your portfolio in the here and now, while positioning it for stronger long-term growth.
Here are some practical financial tips for creating what we might call a “bulletproof” portfolio or, at least, one that’s as close to that ideal as is realistically possible. Whether it’s an economic downturn, a political crisis or a war, the following defensive actions should ensure that your finances are well prepared for whatever’s going on right now. And for whatever might happen next.
Clean up your financial house
Before we start talking about your portfolio, however, let’s take a bit of a step back and think about how to make your overall financial situation as bulletproof as it can be. The following are simple, obvious tips that can dramatically improve your ability to survive and thrive in almost any economic environment:
Control your debt – Yes, it’s old, oft-repeated advice. But it bears repeating during troubled times: if you carry any debt – particularly high-interest or variable-rate debt such a credit card balance or a home equity line of credit – make it a priority to pay this down. This is often the single most effective way to minimize the effects of economic shocks and stock market mayhem on your finances.
Create a “worst case” budget – track what comes in and out of your chequing account every month. Then identify items which you can reduce (or even eliminate altogether) if your financial situation takes a turn for the worse. This doesn’t have to be a complicated, time-consuming exercise – even a 20-minute review or making a simple spreadsheet will help you feel more confident, less anxious and be in a better position to take steps to minimize vulnerabilities if bad things come to pass.
Start an emergency fund – Another piece of timeless financial advice. If you don’t have at least a few months’ worth of living expenses in a dedicated savings account, make it a priority to build one. Consider this to be your financial shock absorber – something on which you can rely, no matter what condition your portfolio is in.
Trim speculative positions – Tackling would-be portfolio problems before they spin out of control is a good idea at any time; it’s even more critical during times of turmoil. Take the time now to eliminate small, speculative holdings (e.g. less than 2% of your portfolio) or any position that adds complexity without significantly improving returns.
Hard times? Think hard assets
Hard assets are tangible, physical assets that can’t be easily created, replicated or destroyed, and whose value is usually tied to ongoing practical needs. Unlike businesses that rely on trademarks, patents or intellectual property (technology stock is a prime example here), hard assets have a value that’s based on their physical properties or utility, which means that they can be objectively valued and that demand for them doesn’t depend quite so much on positive sentiment and optimistic forecasts. This tends to make their performance more resilient during times of economic and political trouble.
By no means should all of your portfolio be geared to hard assets. But if you’re looking for a cushion during the current bout of volatility and you’re overweight technology, bonds or other “paper” assets, now may be a good time to take a look at the following:
Real estate – apartment buildings, warehouse and industrial property, and self-storage facilities offer steady cash flow (and, therefore, lower volatility) than a lot of other assets – exactly what you want during times of market turmoil.
Energy – investments in oil, natural gas and other energy sources such as renewables and uranium. While companies operating in these sectors can be volatile, their performance has historically been a strong hedge against inflation and market uncertainty.
Commodities – historically, metals, minerals and industrial materials have held their value during troubled times, largely because of their “necessity value.” Such assets are foundational inputs for a variety of sectors, providing a floor to demand throughout the market cycle.
Infrastructure – companies operating toll roads, airports, cell towers, pipelines and similar asset-heavy businesses. Many such assets operate under stable, long-term contracts that include annual adjustments for inflation. This makes them particularly insulated against economic shocks and downturns.
Agriculture – food, fertilizer and farmland. The investment case for these is simple: people need to eat, no matter what political or economic crisis is currently making headlines.
Remember that while hard assets can offer protection for your portfolio, they are not without their risks: many hard assets can see dramatic price swings and considerable volatility as supply and demand fluctuate. Which means that it makes sense to keep their allocation modest within a larger, well-diversified portfolio rather than going “all in” on them.
Cash is king – and a whole lot more
You’ve probably heard the phrase “cash is king” before. It’s more than trite advice. During times of economic and political uncertainty, cash is stability, flexibility, freedom, negotiating power and a good night’s sleep all rolled into one.
We briefly spoke above about the benefit of having, say, six months of everyday living expenses in an easily accessible account. If and when trouble hits, it feels a lot better when you can pick up some groceries, pay your phone bill and take care of your monthly car insurance payment with cash on hand, rather than selling the family silver, or the modern equivalent – the investments in your retirement portfolio.
Within your portfolio, it also makes sense to pay attention to how much cash (or easily liquidated cash equivalents, such as GICs or a money market fund) you have on hand. Keeping a small cash reserve – say, between 10% and 15% of your portfolio – will allow you to seize mispriced or overlooked opportunities during times of market turmoil. In fact, Warren Buffett, Carl Ichan, John Templeton and other famous investors have made billions for their shareholders by pursuing such a strategy after a number of crises and market panics.
Even when it comes to evaluating stock investments, it often pays well to look at how much cash a given company has on hand. Much like it does with individuals, a company with ample cash reserves has the flexibility to pay bills, take advantage of opportunities and survive difficult times. Such cash-rich companies can be a valuable anchor for your portfolio; because investors are less concerned about their financial health, their share prices tend to drop less precipitously during stock market downturns.
Keep in mind, however, that when it comes to cash, there can be too much of a good thing. Over the long term, holding too much of your portfolio in cash can mean reduced growth potential – particularly during times of high inflation when the value of that cash is dropping year over year.
As good as gold
We spoke at length, in our previous issue, about the role of gold and other precious metals, so there’s no need to belabour the point here. Suffice it to say that in a world of increasing geopolitical uncertainty, rising inflation and massive (and growing) government debt, there are plenty of good reasons why you might want to allocate at least a small portion of your portfolio to precious metals.
Here’s another advantage: over longer time horizons, there’s some very good evidence suggesting that including an allocation to gold can improve the risk/reward level of your overall portfolio.
This chart makes the point more clear. It shows how an allocation to gold could have had an impact on both the performance (x axis) and the volatility (y axis) of a hypothetical 50/50 stock and bond portfolio over the past 50 years or so. You’ll notice that the Sharpe Ratio (a technical measurement of how much performance you receive for how much risk you accept; the higher the number, the better the risk/reward trade-off) is at its highest point with a gold allocation of 14-18%.
Source: Robert J. Schiller; Reuters Eikon; Incrementum AG
Keep in mind that the exact optimal allocation for your own portfolio will depend largely on the other assets which you have in it: if you have a greater allocation to bonds (and therefore, more exposure to interest rate risk), you’d likely enjoy greater benefits from adding gold than investors who emphasize dividend-paying stocks, or real estate, or any combination of other assets. But you get the general idea: an allocation to gold can reduce overall portfolio volatility as well as enhance returns.
As we mentioned in our more detailed examination of gold, if you’re interested in adding precious metals to your portfolio, be aware that they can be quite volatile – just look at how the prices have jumped around since the start of the year. Make sure to think carefully about the appropriate allocation for you, and do your homework before you put your money to work.
Geography can keep you safe
Last year was a banner year for those who understood the power of diversification. As the U.S. stock market became ever-concentrated in the “Magnificent Seven” mega-cap technology stocks, the smart money was pointing to opportunities in deeply undervalued economic sectors such as small-cap stocks, energy and other market geographies such as Canada and Europe.
Flash forward to the present day and it looks as if 2026 is shaping up to be another strong argument for the value of diversification, albeit for an entirely different reason. Having a well-diversified portfolio – one that’s diversified across assets, geography and even currency – becomes a critical component of “bulletproofing” your finances during times of economic turmoil.
Geographic diversification in particular can make a lot of sense when wars, coups, regime changes, police actions in international waters and other political conflicts are grabbing headlines. How?
Mitigates political risk – Let’s face it: there’s a lot of political instability in the world right now, and that instability can play havoc with the value of assets in an economy which happens to be wrapped up in it. Geographic diversification ensures that only a small portion of your portfolio is affected by a given conflict at any time.
Access to safe havens – Diversification allows investors to put capital to work in neutral or “conflict-free” zones that are economically stable and more geographically isolated from larger conflicts. Think Switzerland and Singapore for developed markets, or India or even Southeast Asia (Vietnam, Malaysia, Indonesia) for emerging and frontier markets.
Currency diversification – One of the consequences of political turmoil is that it often results in wild mood swings in currency markets. For sophisticated investors, holding assets denominated in a variety of world currencies (U.S. dollar; euro; yen; Swiss franc) can protect purchasing power and reduce the impact of currency volatility.
A shield from economic warfare – guns and bombs aren’t the only weapons of warfare; these days, governments use sanctions, tariffs and protectionist policies to aggressively pursue their national interests. By investing in a variety of markets, you minimize the risk of having your portfolio embroiled in such economic conflict.
There are many ways to add geographic diversification to your portfolio. Perhaps the simplest is to invest in larger, multinational companies that do business in multiple regions of the world: think Coca-Cola, Microsoft, Toyota, Barrick Gold and similar organizations. Investing in country-specific ETFs and mutual funds can be another easy way to secure well-diversified exposure to different markets around the world at a very affordable price. Sophisticated investors may want to invest directly in foreign markets – several online brokerages offer access to foreign stock exchanges, bond markets and even foreign currency trading.
Build “all-weather” income
Income is the lifeblood of the retirement portfolio. If you rely on your portfolio for the bulk of your day-to-day retirement living expenses, then it makes sense to make this portion of your portfolio capable of generating a reasonable amount of income in any market condition, during any part of the broader economic cycle. By doing so, you’ll go a long way toward protecting not only your retirement lifestyle, but your peace of mind as well.
Ideally, your income should come from a variety of different sources:
Dividend-producing equities – steady-eddy, blue-chip dividend payers in established, mature sectors of the economy (think Canadian financials, pipelines and utilities) are a good income option for most retirees. Sure, their prices may decline in a downturn, but their reliable payouts provide a kind of “price floor,” making them less volatile than other types of stocks.
Government bonds – the cornerstone of every well-built, defensively minded income portfolio. Sophisticated and/or risk-tolerant investors may want to investigate high-quality corporate bonds as well. Go for quality here; your bond portfolio is no place for uncertainty or speculations.
Real estate – a rental condo, an investment in a Real Estate Investment Trust (REIT) or even a basement suite or coach house can be an excellent way to secure steady income. Bonus points: such income often offers a modest degree of inflation protection in the form of annual rent increases that most landlords pass on to their tenants.
Cash and GICs – consider this the conservative anchor of your income portfolio. No, such investments don’t offer as much income as bonds. But they do offer rock-solid guarantees and security, something that can be very much appreciated if markets enter an extended downturn.
Building a diversified, all-weather income portfolio isn’t just about seeking the maximum yield in the here and now. Rather, it’s about long-term, multi-year consistency – the ability to pay reliable income over several years, in all kinds of market conditions, without ever worrying about whether a dividend cut, a bond default or a late rent payment will disrupt your ability to pay your bills.
Look for tax alpha
Part of the difficulty in dealing with economic and political turmoil is the profound loss of control that often accompanies troubled times. It’s incredibly frustrating (demoralizing, even) to see our best-laid plans for retirement go awry because of unforeseen events halfway around the world … yet, here we are.
And that’s a pretty good argument for why you should be looking for “tax alpha.” Maybe you haven’t heard of that term before – it’s what financial professionals, accountants and tax lawyers call the extra value or added return (the “alpha”) that comes from adapting smart, long-term tax-planning and tax-minimization strategies.
Unlike the “alpha” which you might generate by investing in the right stocks, for example, or by correctly predicting which direction interest rates might go in the coming months, your exposure to tax is something that remains within your control because it depends largely on the portfolio decisions and investment choices which you make.
How does that work in practice? Here are some simple examples:
Tax-loss harvesting – selling losing investments to offset tax payable on winning investments in the same year. If your losses exceed this year’s gains, losses can be carried back to offset gains realized in the previous three years, or carried forward indefinitely to reduce tax on future gains. A smart way to make your tax bill a little more reasonable and clean out your portfolio at the same time.
Asset location – keeping tax-inefficient investments (interest-generating assets such as bonds and GICs) inside tax-efficient accounts (an RRSP, an RRIF or a TFSA) and vice-versa can minimize tax over time. The same goes for holding U.S. dividend-paying stocks within an RRSP rather than in a TFSA; in an RRSP, you can avoid the 15% withholding tax that would be applied on the same investment if you held it in a TFSA. Taking advantage of such preferential treatment is one of the last true tax shelters available to Canadians.
Tax-efficient investments – for sophisticated investors with larger portfolios, specialized investment structures such as corporate-class mutual funds, flow-through shares, permanent life insurance and others can help offset or defer tax, or minimize the tax consequences of moving in or out of certain assets.
Keep in mind that tax alpha can be a very complex, very technical topic… and a very personal one too; strategies that could work well for one person may end up being entirely wrong for you, depending on your personal financial circumstances. That’s why it’s critical to seek out qualified professional advice from an experienced accountant before enacting any of the ideas listed above.
Seek professional advice
The speed with which distressing political and economic headlines have piled up over the past several months has been exceptionally difficult to deal with, for even the most experienced, most disciplined investors. But remember that you don’t have to muddle your way through it alone. One of the best ways to bulletproof your portfolio may well be to get a second opinion on it from a qualified investment professional – ideally, one who has lived and managed money through troubled times before.
Working closely with a professional advisor or wealth manager can lend a welcome sense of historical perspective and objective thinking to whatever economic problems and political crises the world is going through. Perhaps more important, this can provide a starting point for formulating a personal “action plan” – a list of concrete, practical steps that will make your portfolio stronger, more resilient and ready to take on whatever comes next.