Volatility in the current stock markets has left many investors puzzled about their next steps. Is it possible to grow your portfolio? Are there opportunities to invest? Today, the days of the buy and hold strategy are gone.
Ask yourself: Are the investments being recommended to you specifically tailored to your needs or are they just general recommendations being made to everyone in your risk category? How closely are your investments being watched? Is your advisor active and keeping up with the latest trends or are you being told to buy and hold and eventually you will make money?
Investors can take several steps to ensure their money is protected while maximizing growth.
Look To Leaders
Identify current economic trends where the â€œsmart moneyâ€ is being invested. In times of distress, look to large companies … leaders in their industry. These companies tend to outperform in good times and help cushion a portfolio against losses when times are tough.
Get Paid To Wait
Companies that pay dividends tend to outperform over the long run. Those that continue to increase the amount of dividends will provide some growth while you wait for the stocks share price to rise.
Shop For Bargains
Smart investors look for investments that are â€œcheapâ€ by historical standards and trading at low multiples. Many investors look to the P/E ratio (price of the stock versus it’s to earnings) as a measuring stick to find good valued growth investments.
Reduce Cost Of Investing
Depending on the size of a portfolio, consider having your own specifically tailored mutual fund created out of individual securities in a fee-based scenario. Fee-based accounts can cost less than managed products, such as mutual funds, and their annual fees may be tax deductible. This keeps more money in your hands and can cushion a portfolio in difficult times.
Investing in quality companies that pay consistent dividends and are inexpensive is the best way to protect your money today and grow it over time.