What You Can Do About Lower Stock Market Returns
Although you can’t control the stock market, you can adapt to a rising-interest-rate environment. According to modern portfolio theory, you should be in a diversified portfolio regardless of the investment environment. If you find yourself currently overweighted in stocks, there is no better time than the present to revisit your asset allocation and make sure you’re properly diversified.
On the stock side, companies that pay higher dividends often prove more attractive in a rising-rate environment. On the bond side, shorter-term investments, or those with rate-adjustment features, can help defend against rising interest rates.
