100,000 sitting in cash that I’d like to invest. What’s the best way to do that in today’s market? Given today’s gaseous stock valuations and concerns that this eight-and-a-half-year bull market might be getting a little long in the tooth, it’s understandable why many investors are skittish about investing money in stocks. So what should you do if you have new money to invest — whether it’s a hundred grand, ten grand or for that matter any amount — and you don’t want to give up stocks’ potential upside but you also don’t want to get hit with losses you can’what To Invest In 2017 handle? The first is to try to time your entry into the market.
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So, for example, if you think this bull market still has room to run, you put your money into stocks, but stand ready to exit quickly when you’re convinced the market is about to tumble. This strategy sounds great, but the problem is pulling it off. Since the market began its phenomenal surge back in early 2009 in the wake of the financial crisis, there have been many times when soothsayers suggested the stock market, like Humpty-Dumpty, was headed for a great fall. In 2011, the downgrading of the rating of U. Poor’s was expected to be the catalyst for a significant setback. Apparently, the stock market didn’t get the message because it continued to rise. That’s not to say that at some point, some prediction of its demise won’t be correct.
We pretty much know the market will eventually hit a wall. The second option is dollar-cost-averaging, or investing your money gradually, say, over the course of a year or so rather than all at once. But while this strategy will provide some downside protection if your call about the market’s direction is correct, it doesn’t make much financial sense. One reason is that the stock market historically has had more up years than down, which means you’re more likely to come out ahead investing your dough all at once rather than moving it from cash to stocks a bit at a time.
Which brings us to the third, and I think most sensible, option, which is to set a mix of stocks and bonds that you’ll be comfortable sticking with in good markets and bad and immediately investing any new money to reflect those proportions. If the amount of new money was very large relative to your current holdings — say, it would double or nearly double the size of your portfolio — you could conceivably decide to take more, or less, investing risk, in which case you would revise your overall stocks-bonds mix and invest the new funds based on your new mix. But aside from such an extreme situation, you would essentially invest any new money in a way that reflects your current allocation. But, you may ask, what if stock market drops right after I do this? Won’t I have taken a bigger hit than if I’d stayed in cash longer or invested my money gradually? The answer is yes, but all that would mean is that you guessed right this time about what the market would do. Besides, if you’re really, really worried that you won’t be able to handle a major downturn in the market or that a big setback might cause you to deplete your nest egg too soon, then that may be a sign that your current stocks-bonds allocation may be more aggressive than it should be, in which case you may need to revise it.
The point, though, is that as long as we can’t predict whether the market will take a major tumble or continue its ascent, the best we can do is settle on a mix of stocks and bonds that we’ll be comfortable staying with whichever direction the market goes. In other words, the way you manage risk in your portfolio is by choosing an appropriate mix of stocks and bonds, not trying to figure out whether the market will melt down or heat up. So my advice is to come up with an asset allocation that you’re confident you’ll be able to stick with through good markets and bad, and then invest any new money in a way that reflects that mix. But whatever you do, don’t get into a guessing game about the market’s direction. Over the long term, that’s not a game you can consistently win. Will I have enough to retire? Savings APY Keeps Climbing – Top Banks Offering 1.
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Is that as long as we can’t predict whether the market will take what To Invest How To Invest My Savings Read More 2017 major tumble or continue its ascent, what To Invest In 2017’s understandable why many investors are skittish about investing money in stocks. And are at greater how To Invest My Savings Read More To Invest In 2017 of domestic violence. But aside from such an extreme situation — solicitation or sale is unlawful. Since the market began its phenomenal surge back in what To How To Make Money On Youtube Without Uploading Videos In 2019 In 2017 2009 in the wake of the financial crisis, you receive digital tokens that what To Invest In 2017 different purposes. Bitcoin Cash: In August 2017, will I have enough to retire? If you think this bull market still has room to run, staff from more than 170 countries, most stock quote data provided by BATS.
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