Bare trust investments are often set up by parents or grandparents to provide inheritance money to their children or grandchildren. The goal is often to provide the child with money at an important stage of their life, such as entering college or other adulthood stages. The trustee manages the assets in the account until the beneficiary turns 18 years old, and at that point, they will have complete access to the assets. If you are a trustee of a bare trust investment, here are some tips to help you navigate the assets within the investment account, including what to do when market volatility strikes.
Diversity Can Help You Manage Risk Tolerance
One of the benefits of bare trust investments is the options available to you. You have access to virtually every type of investment option, including bonds, stocks, futures, mutual funds, options, and even foreign currencies. However, most trustees of bare trust investment accounts will diversify the portfolio to help manage risk by keeping it as balanced as possible. These types of investments aren’t necessarily designed for risky investors, but are more for people who want to earn the highest returns possible without inheriting a significant amount of risk at the same time.
Stay Focused On Long-Term Goals
Market volatility can strike at any time, and we may not know how quickly or how severe it will be. However, as a trustee of a bare trust investment, it’s important to remain focused on long-term goals and not make a panic decision to exit the market at the first sign of volatility. As sharply as markets can fall, they can rebound just as high. It may take a little more time to rebound, but most investors who keep their long-term goals in focus and don’t overreact will come out ahead with their bare trust investments.
Remain Steady During Market Volatility
The coronavirus pandemic caused the markets to plummet sharply when it first began. Many investors panicked and sold a lot of their assets, which may have made sense, depending on the investor’s unique situation. However, for most long-term investors with bare trust investments, it’s vital to remain steady even during high market volatility. If anything, follow the opposite course of selling and buy into the market when it hits low points, to the extent you have the cash available to do so. Most investors will benefit more in the long-run by doing so.
No matter what your current level of financial knowledge is, Stock Investing Info is here to help. Bare trust investments can be valuable for many different reasons, and managing them appropriately can maximize your gains while minimizing risks at the same time. General advice most financial advisors give is to maintain your long-term focus on your financial goals and don’t stress out too much about individual situations impacting the stock market. This advice is true for bare trust investments as well, so if you have any specific questions about yours or investing in general, contact us at any time.