Posted on 01/25/2017 4:01:56 AM PST by DIRTYSECRET
OK MY FRIENDS: I'm expecting a big market correction even with the 'exuberance' of a Trump win. Can these companies put it all in a cash account that earns nothing? Bonds are 'safe' but this time around I don't know. I'm not a tin-hat type that will hoard gold. How can the government insure $250k in our savings accounts if they are in reality the inmates running the financial asylum? Help me. Thanks.
Nonsense. Dow 20k this week and then some
When are you retiring on your stock-heavy portfolio?
stock/bond mutual funds will not go totally to cash - if you want to be in cash exchange into their money market fund and wait for your entry point into whatever market attracts you then, stocks or bonds. i wouldn’t call bond funds “safe” as they adjust to rising interest rates by lower values in the near-term. it appears we will have higher rates so if you want to freeze your values, go to money market.
I wouldn’t go all cash - always diversify - but both Vanguard and Fidelity have money market and short term bond funds to choose from.
Been retired & I haven’t made any money for 2 years. Half is in bonds and the other half in very conservative mutual funds. If the market does a 2008 again I don’t want to lose 60-70% of what I have. Too old to deal with that.
Bonds are safe? When interest rates go up, your bonds will go down in value. Buy good dividend paying companies and automatically reinvest all dividends back into buying more stock. When the market goes down, rejoice because you will be buying stocks “on sale” with your dividends.
Total financial system meltdown? Or a market “correction”?
If the former, then you need a SHTF plan - food, water, shelter, and some store of wealth. Historically, people hold gold, but I’ve always been a skeptic - you can’t eat it, burn it, or convert it to money if there’s no stability anywhere. It’s only valuable if someone else is willing to give you something else of value for it.
If you’re talking about a correction, then the closest thing to cash that you can “invest” in is a money-market fund. If you think the US government is ultimately stable, then a money-market fund that invests exlusively in T-bills is good.
Now, if you have the courage of your convictions, there are funds and ETF’s - “short” funds - that go up when the markets go down. Some are even leveraged where, for example, a 1% decrease in the stock market will get you a 2% increase in fund value.
But, all that said, market-timing (trying to pick and trade market tops and market bottoms) simply does not work in the long run. If you are concerned about the principal value of your investments, then you probably already have too much invested in risk assets. If you don’t need those funds today, in 5 years, or in 10 years (for future retirement, as an example), then you’re better off simply rebalancing your portfolio quarterly or annually to include a mix of stocks, bonds, and “safe” treasuries. A good rule of thumb is to have the stocks be a percentage equal to 110 minus your age. So, a 40-year old planning retirement at 65 would have 70% in stocks (110-40=70).
1: Figure out how much money you need.
2: Put the money you need in ten years in stocks.
3: Put the money you need in five years in quality bonds.
4: Put the money you need for the next two years in a money market account.
So I should diversify today and let the chips fall where they may?
If you’re gonna do that, at least consider capital one 360 for 1 1/2 percent.
But I dont see a YUGE correction coming and if you’re under 55, stay in at least a little.
I started moving away from growth and in the direction of dividend paying stocks when I was 50. I've always reinvested. Most large cap companies that pay good dividends also are likely to have more stable valuations during down turns. Johnson and Johnson is one of my favorites for this type investing.
Warren Buffett can’t predict market turns but you can. OK.
Go long on mattress futures. Great protection against total financial meltdown.
IF you have good blue chip securities, they’ll be the first to go up, when people start buying again.
Too many variables for me to give specific advise. Things that go into the mix: What’s your age? How old are you? Are you retired yet and, if not, when? Do you have a pension or are your savings your retirement? What are your assets and what are they in? (all assets - house, property, stocks, bonds, in retirement accounts, outside of retirement accounts, etc.). What are saving/investing for (investment objective)?
What you should do at this point is entirely dependent on your own situation. But if this is your life-savings we’re talking about, and you’re as worried as you seem, then you likely already have too much market exposure.
Back when I used to study this stuff for a living, there was almost no long-term difference between rebalancing quarterly or annually. BUT, if you’re out of balance now, better to move toward your appropriate asset-allocation sooner rather than later. If you’re WAY out of balance, then you might consider doing it in 2 or 3 steps - a bit each quarter until you’re where you ought to be.
the biggest lesson of the financial crisis is that the US government, in reality, stands behind even “uninsured” money market funds. If those were to go down in value, then it really might be “canned goods and firearms” time! That’s not going to happen. If you are truly terrified of market risk then money market funds are “safe”, but remember you’ll get a yield that’s lower than the rate of inflation if the market keeps going up you will be poorer than your peers.
Talk to your broker about Unit Investment Trusts. The contacts are usually 1 to 2 years. There’s a ton of them.
Not only that, but there are blue-chip ETFs that pay regular dividends. Even if the price of the stocks is down, you can still count on some income. Of course, if you don’t need that income, or don’t want to pay regular taxes on it, re-invest it back into the fund. Consider an ETF like DVY.
Asking for financial help online is a very bad idea. Contact Fidelity directly.
How to create a million dollar portfolio guessing the Stock Market:
1) Start with 2 million dollars
2) ...
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.