I received a comment asking “Should I invest in the current times right now?”
The Dow Jones is trading around 23,000 and we have recovered almost half of the gains lost during the major market crash in February. Trump stepped up with a $2 trillion dollar stimulus package and a short squeeze (short traders covering their positions to prevent massive losses) have caused stocks to rebound. Is this for real or do we have more problems coming soon?
If you’re nervous right now or afraid of risk then try diversifying your portfolio using the “100 Minus Age” rule. Subtract your age from 100 to determine your unique stocks to bond mix.
For example, I’m 33 years old so my ratio would be 67% stocks & 33% bonds. RIght now, I’m around 90% in stocks so my ratio is out of whack lol.
Invest in Bonds If You’re Nervous About Stocks
The solution is long term treasury bonds if you are afraid to invest in stocks right now.
My favorite are the Fidelity Long Term Treasury Bond Index Fund (FNBGX) and SPDR Portfolio Long Term Treasury ETF (SPTL). There’s also a good Vanguard Treasury ETF (VGLT). So there you go. A few alternatives to investing in stocks.
Now, if you’re still young and under 30 then consider getting more aggressive in the stock market. TIme in the markets is your friend. You should be buying stocks like crazy so you are comfortable in your 30s and beyond.
If you’re in your 30’s or 40s then take a look at those treasury bond index funds and ETFs to help reduce portfolio volatility.
If you’re over 50 then consider moving your funds heavily into bond funds or cash. Do you really need to risk your retirement on more stock gains? Probably not. Earnings season is coming soon and a lot of stocks are going to fall. You don’t want to end up taking a big loss due to the COVID-19. Also this avoids panic selling.
Another option is a high yield savings account.
Hope this helps and right now portfolio allocation is key to surviving any upcoming surprises.
So to answer your question, I am still investing but am moving more money into bonds while keeping my eyes on those upcoming earnings reports.