Adjusting My Portfolio for Upcoming Rate Cuts 💵✅
With rate cuts coming, I’m planning to adjust my asset allocation to take advantage of potential benefits across different sectors.
First, I’m increasing my exposure to growth stocks, particularly in the tech sector. Lower rates typically benefit these stocks by reducing borrowing costs and boosting the present value of future earnings. I’m also looking at ETFs like VUG, SCHG, and IWY, which I believe will rally as rate cuts come into play.
Next, I’m focusing on REITs. REITs offer higher yields and naturally benefit from lower borrowing costs, making them appealing in a low-rate environment. Since they are required to pay out at least 90% of net earnings as dividends, they provide a reliable income stream. I’m targeting O, VNQ, and SPG, which have strong portfolios in prime locations.
Lastly, I’m adding more consumer discretionary stocks to my portfolio. Companies in this sector tend to benefit from increased consumer spending that follows lower interest rates. With more disposable income, consumers are likely to spend on non-essential goods and services, so I’m considering stocks like Amazon and Nike to capitalise on this potential boost in consumer confidence.
By diversifying across these sectors, I aim to balance risk and reward, positioning my portfolio to benefit from the upcoming rate cuts. 📈💼
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