The typical advice given to people who want to invest conservatively is to put a large percentage of their holdings in bonds. In the past several decades, bonds have given a “safe”, although lower return when compared to stocks. But despite a 30-year bull market, bonds may not be as safe as they once were.
Interest rates throughout the world have been declining ever since the early 1980s; however, a strategy used by central banks throughout the world in order to recover from the 2008 Economic Crisis was to keep rates even lower, artificially. As nations recover from recession, loose monetary policies are being stopped causing interest rates to rise and thus, bond prices to fall.
High-dividend paying stocks, such as the Bank of China which yields over 6%, are now preferred by many investors over bonds.
Because of this, investors are no longer able to just buy bonds in order to protect themselves. This is where being a global investor gives you a huge advantage. By choosing to invest in assets located in certain countries that are less impacted by global events, you gain an extra layer of diversification that simple asset allocation does not provide.
Keeping a certain amount of cash on you, preferably in multiple currencies, is also important. A wise investor is able to make money regardless of whether being in a bull or bear market. Having cash in hand gives you the flexibility of being able to adapt to market conditions and make money during a recession by purchasing assets at a low price, or shorting them.
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