If you’ve been investing in the stock market for a while, you know it goes up and down. In one year, you might earn a healthy 10% return. The following year, you only scrape by with 5% gains. As long as you’re not seeing huge losses, you’re usually okay with weathering the ups and downs.

Periods of volatility, on the other hand, can be worrisome. Even some of the most risk-tolerant investors could break a sweat from the anxiety. Volatility is when significant gains or losses can happen from one day to the next. Market volatility may also signal a lack of growth and uncertainty. Suddenly, investments with proven track records aren’t a sure thing.

You can’t count on blue chip stocks to raise your portfolio’s value. With extreme volatility, it’s even possible more conservative bond index funds won’t mitigate the risks of stocks. Investing in alternative assets, such as real estate and commodities, can help offset inflation and economic downturns. Let’s examine how.

Real Estate Generates Income

The lessons of 2008’s great recession might make you think real estate isn’t a sure bet. After all, property values tended to go down in most markets. Nonetheless, those who held onto their properties could eventually see gains once markets recovered. Furthermore, investors who bought properties while the prices were low, realized gains as the recovery began.

But beyond potential equity gains, real estate can produce steady cash flow. While stocks sometimes pay dividends, you need a sizable number of shares for the payments to be noticeable. Properties are tangible assets you can rent to others to generate income regardless of how the stock market performs.

More resilient real estate assets like mobile home parks can be especially beneficial during uncertain times. Mobile homes are economically resilient because they cost less than the average house. First-time home buyers, anyone looking to downsize, and those who are price-sensitive continue to flock toward affordable housing.

In regards to mobile home parks, Lifestyle Investing expert Justin Donald addresses the value of this asset class, saying they’re “Among the least consolidated real estate asset classes. Mobile home parks are where I began my investment career. Often overlooked, these investments can provide regular cash flow and are relatively risk-free.”

Private Equity Funds Have a Long-Term Horizon

Volatility and uncertainty may return in cycles. Yet, both tend to be short-lived. In other words, it’s rare for either to maintain a grip on investment activity. Looking at the long-term performance of the major market indexes like the S&P 500, you tend to see respectable gains. For instance, certain S&P 500 index funds have average returns of around 13% over 15 years.  

Holding onto investments with long-term horizons helps weather short-term storms. Private equity is one of those asset classes. Private equity funds aren’t available on the open market unlike publicly traded stocks and bonds. To get in, you must be part of an institution, an accredited investor, or have a high income/net worth.

You may already be indirectly invested in private equity funds if you have a pension, insurance policy, or annuity. If you meet the qualifications for direct investment, you’ll want to prepare to hand over a larger initial sum. While you don’t have to always fork over a ton to buy stocks and bonds, private equity funds are a different ballgame.

Because these funds aim for long-term returns, they’re also not an asset you can liquidate in a pinch. You may have a waiting period before you can sell. Returns might not manifest until several years down the road. What you get in exchange is risk mitigation. Your investment isn’t subject to short-term volatility, helping to balance other assets that might lose value during uncertain times.  

Commodities Enhance Portfolio Diversification

A commodity is something people buy regardless of the economy’s performance. Your grocery store carries many commodities, such as flour, sugar, produce, and milk. If you expand beyond food items, energy sources such as oil and natural gas come to mind. Goods and services populations depend on tend to be more resilient during economic uncertainty.

This resilience makes them sound investments for the risk-averse. Resiliency also makes commodities attractive when you need to diversify your portfolio. You don’t necessarily have to sell off all your high-risk investments if you can hedge potential losses with more stable assets. Commodities aren’t always high earners. You may not see the same level of returns you would with international or growth stocks, for instance.

However, what you will often see are smaller, steady gains. These gains increase the resilience of your portfolio during stock market volatility. While riskier investments experience wide swings, commodities are walking to the beat of a different drum. These investments aren’t swinging with the crazy ups and downs you may see in the financial news headlines. Instead, these assets continue to perform with relative predictability.

The performance of commodities is similar to conservative investments like CDs. The return may be smaller, but you know what you’re getting. You can count on its stability whether it’s 3% or 5%. When higher-risk investments trend downward due to volatility, you’ve got the steady gains of commodities to erase some of those losses.  

Securing Your Finances During Uncertainty

It’s not easy to have investments when the economy’s on shaky ground. Following the news about the financial markets during periods of volatility is, essentially, a nail-biting exercise. Staying informed is one thing, but losing sleep over your portfolio’s performance isn’t productive. At the same time, you want to take measures to protect the wealth you’re building.

Investing in assets besides traditional stocks and bonds can be a more productive strategy than shifting your money between conventional index funds. You’ll need to change your mindset to one that thinks long-term. But you won’t have to worry as much about how the market performs from day-to-day.

With private equity funds, you’ll potentially boost your cash flows with real estate and gain in the long run. You’ll also increase the diversification of your portfolio with commodities. Although alternative investments don’t mean you can take a completely hands-off approach during uncertainty, you could gain peace of mind. You’ll know not all your wealth is subject to volatility and can continue to grow despite economic woes.