Defense Wins Championships - and Preserves Wealth

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People say that the best defense is a good offense. They are wrong, at least when it comes to protecting wealth.

Investing is about more than aggressive plays and big, risky bets. It’s easy to forget the other side of the equation after a decade-long bull market defined by slow-but-steady growth. Here’s a refresher: Sometimes the best defense is a good defense, and financial advisors have plenty of tools to craft defensive strategies that will stand up to all but the harshest economic headwinds.

Let’s start with the obvious safe-haven investments and where they stand.

U.S. Treasury bonds

If all else fails, history says buy Treasury bonds. They’re as close to risk-free as possible. Treasury securities are a great wait-and-see investment: stable, liquid, and backed by the full faith and credit of the most powerful country in the world.

Municipal bonds

While they aren’t as stable as Treasury bonds, municipals offer an enticing mix of low prices, relatively high yields, and tax-exempt returns. Munis aren’t always a safe haven against inflation and recessions, but 2023 may be different. As J.P. Morgan pointed out, most municipalities have remarkably strong financial positions, so their bonds could be both safe and lucrative in the short to medium term.