How to Invest in a Rough Economy: Investment Advice from the Experts
The stock market crash of 2008 lost many investors a lot of
money, and had many other investors bailing out of stocks for the
safety of savings and checking accounts, treasury bills and gold.
However, it is still possible to invest - and yes, even make
money - during the current rocky economy.
The broad decline across financial markets in the past year has
persuaded a small but growing number of financial experts and
advisers to ditch the traditional buy-and-hold strategy - which
promotes long-term investing in a mix of assets - for a new
approach that aims to sidestep future market plunges and ease
What does this mean to the common everyday investor? Read on for
some investment advice that everyone can use.
First and foremost, the best investment advice you'll ever
receive is to take control of your own future. You are the only
one who will have your best interests at heart. Even if you do
not understand exactly how to invest your money or don't feel
comfortable doing it yourself, an investment advice site such as
MySMP.com can get you on the right path to getting the right
advice and asking the right questions.
Take an Active Approach - Buy and Hold is Out
A common misconception about the stock market is to just "ride
it out." Don't sell and eventually your stocks will go back up,
right? Wrong! If a financial advisor suggests that you need to
take a long term buy and hold approach, you should run. They
probably don't understand how to invest the right way and figure
that the market will go higher over time. You want to hear
answers suggesting that the investment advice you will be
receiving is based on a sound understanding of the financial
markets; including concepts such as technical analysis and
As we learned in 2008, established stocks such as Lehman Brothers
and Bear Stearns can go at anytime, so do your research and find
out which sectors have the most potential 2-3 years out. These
are sure to be your best investment.
Diversify Within Different Assets
Don't put all of your money into stocks, true diversification is
asset class diversification; including stocks, bonds,
commodities, and currencies to name a few.
401k Plan Investment
Here are a few pieces of investment advice when considering a
401k plan. First, contribute the full $15,500, or deduct 15% of
your gross pay, to your 401k plan if you can. This is tax free
money, and it's a no brainer. If you cannot make the full
contribution, be sure to at least contribute in an amount equal
to your companies match.
If your company matches 6% and you only contribute 3%, they will
only match 3%.
If you are coming near the age of retirement and can't afford to
lose any more money in your 401k, get out of stocks funds and
move your money to money market. If you are not comfortable
investing money into stocks, put it into a money market fund
within your 401k; the key is not to stop investing.
If you are going to manage your 401k assets, make sure you
diversify between different asset classes, if possible.
Unfortunately, you are typically limited to stocks and bonds. If
you don't have options such as commodities available to you, go
talk to your plan sponsor and push to get some more selection.
When you leave your company, be sure to transfer your funds to a
rollover IRA; you will be able to trade any asset class here.
There is no one size fits all answer to investing and you're
probably not interested in becoming a full time money manager.
Investment advice is always easy to come by but good advice is
very hard to come by. The key is to put people around you who
have a good track record and know how to invest with capital
preservation in mind at all times. Never get involved with people
who promise you the world. Odds are they will do well for a while
but their ego will eventually blow up in their face.
Article written by: Sarah Simmons.
MYSMP, or My Stock Market Power, was created as a financial
educational resource to enhance your trading acumen. First
created to offer education on day trading and technical analysis,
www.mysmp.com/ has expanded to include articles on stock
trading, bonds, options, futures, forex, and investment advice.