Investing through the storm: How to build a resilient portfolio in uncertain times

Charleen Sng thought she had it all planned out. The 32-year-old engineer was steadily investing $3,000 of her income each month, and was on track to growing her monthly dividends to fully cover her living expenses.

Then, the global markets went crazy. A combination of tariff announcements, inflation, interest rate swings and geopolitical uncertainty jolted her dividends off course, and sunk her investments 15 per cent into the red.

These international events also affected her employer’s business, and she started fearing the worst.

“In my rush to achieve financial independence, I had forgotten to buffer for tough times. Thankfully I still have a stash of funds in cash management accounts to tide me through,” she says.

This decision to stay calm was the right move.

Fong Yong Hui, master financial consultant at Singcapital, explains: “We can’t control the markets, but we can control how we respond. Pause before reacting. Don’t rush to sell or make a move out of fear. The best investors aren’t the ones who react quickly, but those who stay the course with clarity and calm.”

However, Charleen’s lack of preparation for a potential recession is concerning, according to experts.

“During stable periods, people may feel financially secure simply because they can meet their everyday expenses – but this can create a false sense of security.

“When economic or personal shocks occur, many may realise they lack the tools and planning needed to adapt without significant compromise,” says Christopher Albrecht, chief executive officer of Sun Life Singapore.

What financial resilience looks like

Resilience can be both financial and mental, says Valerie Kok, partner at wealth management organisation St. James’s Place.

“A resilient portfolio is well-diversified, actively managed, and aligned to your goals, needs an risk appetite at different stages of life. It should be able to absorb market shocks, adapt over time, and keep you on track – able to weather storms without derailing your goals, like how a life jacket can’t stop the waves, but helps you stay afloat,” she says.

“Resilience also means peace of mind. If your portfolio keeps you awake at night, it’s a sign that the structure may need rebalancing.”

Valerie also notes that many investors follow trends or only focus on certain types of investments. To achieve true diversification, she says one must go beyond mixing a few funds. As they say, don’t put all your eggs in one basket. Should one investment dip, the others can help to cushion the impact.

A well-diversified portfolio might include global exposure (developed and emerging markets), different asset classes (equities, bonds and real assets), and investment styles (growth investing and value investing).

Beyond the markets, financial resilience also denotes a person’s ability to navigate and overcome high-impact life events such as job loss, illness, or unexpected financial obligations, as well as ultimately achieving one’s financial and legacy goals at the end of life, says Christopher.

The key is to take a long-term view, bolstering it with protective instruments such as insurance.

He shares: “Building resilience – both within a portfolio and across broader finances – requires proactive, long-term planning. This includes sound budgeting, financial literacy, access to quality advice, and importantly, incorporating wealth planning tools such as life insurance, an often overlooked part of an overall life portfolio.

“One can consider a yearly comprehensive review as a start to allow one to track one’s financial health, and recalibrate financial goals for the year ahead.”

Yong Hui says: “Like a well-built house, a solid portfolio may sway during the storm, but it doesn’t collapse. It may experience short-term ups and downs, but the foundation holds.”

However, this does not mean shutting out volatility and risk altogether. There must also be allowance for growth, while being prepared to weather the storm.

“Rather than chasing the highest possible returns, the focus should be on generating risk adjusted returns, such as achieving steady, reliable growth, while keeping potential downside in check,” she adds.

To make one’s investment portfolio more resilient, Angela suggests reallocating some assets to safer investments, such as bonds or treasury bills. These have lower returns, but tend to be more stable. This includes the Singapore Savings Bonds, for example.

She advises: “Do not invest in products that are more than your risk appetite. Always try to invest only a portion of excess money that will not affect your daily cash flow needs – this is so that you won’t make emotional decisions.”

Valerie adds: “Liquidity also gives you choices. It provides breathing space, so that you’re never forced to make a financial decision from a place of desperation. In today’s climate, where interest rates and inflation can swing, being cash-ready gives you confidence and flexibility.”

Having spare cash beyond your emergency fund might also open new doors. Adds Yong Hui: “Liquidity gives you not just protection, but also the flexibility to take advantage of opportunities when others are still reacting in fear.”

Angela concurs: “Although it can feel quite chaotic, there are investment opportunities present in an inflationary environment. For instance, safe havens like gold and the Singapore Dollar are assets that investors flock to in times like these.

“It is also a good opportunity for new investors to explore valuable overpriced stocks that have been ‘recalibrated’ in pricing due to the trade fears.”

Preparing for uncertainty

While techniques such as meditation and journalling may help calm the mind, what truly helps is knowing that your finances are on a stable foundation.

“When you know your emergency fund is in place, your insurance needs are covered, and your investments are aligned with your goals and risk appetite, you’re far less likely to panic when headlines scream ‘market crash’,” says Yong Hui.

“Think of your financial plan like a well-packed suitcase – if you’ve already prepared for all weather, a sudden storm won’t throw you off.”

In fact, all the experts Her World spoke to emphasised the importance of having an emergency fund – six to 12 months’ living expenses in accessible cash – this provides much-needed liquidity in uncertain times to prevent rash decisions, such as selling stocks at a loss just for survival.

“In today’s economic climate, job security is a major concern. Many people have only one source of income – which is their salary – and rely heavily on it for daily expenses. Consider taking a small step back on investing if you have not built your emergency fund yet,” says Angela.

Why time in the market beats timing the market

A Nasdaq article by The Motley Fool looked at major market crashes over the past century. While some, like the 1929 Wall Street crash, took decades to recover, the market has consistently rebounded. The S&P 100, for example, has grown nearly 540 per cent since 2003.

For instance, investments without resilience could mean going “all in” on cryptocurrencies or stocks. Investing in riskier investments will lead to a larger impact when shocks happen, she adds.

While the past market crashes can be seen on the chart, these are but brief blips in the entirety of those two decades, testament to how staying invested could triumph timing the market – entering and exiting based on predictions – for uncertain gains.

“Having spent the past 17 years in financial planning, I’ve witnessed first-hand how markets move through cycles of uncertainty and recovery. History has shown us that while markets may fall suddenly, they also tend to recover over time. This perspective gives me reassurance, both personally and professionally,” says Yong Hui.

Valerie agrees: “Whether it was the 2008 Global Financial Crisis or the pandemic-induced crash in 2020, recovery is not just possible – it’s probable. Yes, every crisis feels different when we’re in it. But the market’s ability to rebound is one of the most consistent patterns in investing.”

One investment strategy is dollar-cost averaging or DCA. This is when you allocate a fixed amount of money on a regular basis into a particular investment – purchasing more shares when the price is low, and fewer when the price is high.

This averages out the investment cost over time, and focuses on a consistent, long-term approach.

“DCA takes the pressure off timing the market; it’s a disciplined, no-drama way to grow wealth steadily over time,” says Yong Hui.

Adds Valerie: “Many young or first-time investors worry about ‘getting it wrong’ during downturns. Nobody wants to lose money, especially if they are new to investment. Some only want guaranteed products. But often, the best strategy is to stay in the game and be consistent.”