How to Invest with $10,000-$50,000 in the Current Market Condition
The stock market has experienced tremendous volatility in the past 3 months leaving many of us wonder what and how to invest our money in 2009. Even though most experts agree that our economy has not hit the bottom, but with stocks sitting at dramatic lows, 401K and IRA’s continue being great retirement planning vehicles, here are some advices for your 2009 investment strategies:
Safe Haven – if the possibility of losing money with your investment causes you great stress or if you’re nearing retirement age, this might be for you:
Treasury Notes (Bonds) – With fear still high on the Street and many investors losing confidence in the market, it is likely that the market has not bottomed. Sitting in on cash until we see fear receding is a safe haven bet for those who prefer to take minimal risk during recession. Yields on 10-year Treasury notes should go considerably higher and should be a safe investment.
Little Risk – if you’re open to some or little risk taking in exchange for higher return or is nearing retirement age, this might be for you:
Domestic Blue-Chip American Companies – Companies like General Electric (GE), Microsoft (MSFT), Intel (INTC), Kimberly Clark (KMB) are sitting at good value. These companies are the backbones of American economy who offer real value and products that are needed even during economy recessions. A diverse investment portfolio including a couple of those companies or buying the S&P 500 through a mutual fund or ETF are both good choices.
Semi-Aggressive – if you understand investment comes with considerable risk and is not concerned with a 20% swing in either direction, this might be more you:
Diverse Portfolio – Use traditional diversification strategy by investing in a combination of domestic and international stocks and bonds. A portfolio along the lines of 25% in S&P’s large-cap stock index, 20% in small-cap value, 25% in international, 10% in commodities, 10% in Treasury inflation-protected securities and 10% in cash is a reasonable mix of return and risk. Individuals in this category should adjust the percentage based on their level of comfort with risk.
Aggressive – if you prefer the high risk high return model or are using extra income or are not concerned with retirement at this point, this might be for you:
Small / Mid Caps – The real opportunity in a market tumble usually lies in stocks below $10 per share. Be careful to select reputable companies and avoid Pink Sheets and OTC’s. Many Pink Sheets and OTC’s will likely become penniless in 2009. ProShares Ultra Dow 30 (DDM) contains high quality choices that are worthy to be looked at.
Overall, be cautious to assuming now is the time to pour everything back into the market. Try putting your funds into the market in stages rather than all at once. 20% is a reasonable amount to test the water.