The stock market has been roaring since the last presidential election. Some people are getting nervous about putting additional investment money to work in stocks. Is is too late for the market? And what else are good investment ideas now?
These questions have been addressed in a recent article written by Financially Free Investor entitled “Retirement: Where could you invest your cash today?” that recently appeared on the Seeking Alpha website. Let’s dig into the ideas presented:
Current State Of the Stock Market
The stock market today is characterized by moderate volatility while prices remain at or near the highs reached in January 2018. Because of this, some investors are running scared.
Some Investment Ideas: Stocks and Otherwise
The article strongly supports that investors pursue a multi-strategy approach that seeks to preserve capital, generate a 5% return in income, and aims for market-matching total returns longterm.
A fair number of different investment vehicles are considered in this article. They include:
- CD’s or a Money Market Fund
- A Target-Date Fund
- Balanced Stock and Bond Funds
- An All-ETF Portfolio
- A Dividend-Growth Portfolio
- Real Estate Investment Trusts (REITs)
- Business Development Companies (BDC’s)
- Master Limited Partnerships (MLP’s)
The article suggests that wide diversification among these instruments is a very good idea. REIT’s, BDC’s and MLP’s are added to the mix because of their generous dividend yields. A portfolio divided into four baskets is presented under the heading “What would we do?” Basket A, at 35% of the portfolio, is devoted to dividend growth stocks; Basket B, amounting to 25% of the capital, is invested in income instruments; Basket C, allocated at 25%, is dedicated to a risk-adjusted rotation strategy; and Basket D, at 25% of the portfolio, is invested in bonds and bond-like securities.
Investors need to keep abreast of changing market conditions and make portfolio changes as warranted. The ideas presented in the article emphasize diversification and prudent risk-taking as the main components of a medium- to long-term approach in today’s investment climate.