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What Now? We Recommend Bonds, Your Mix, and Auto-Stash for Stocks

October 26, 2018

2 min read

Volatility happens. The market sometimes goes up, down, and sideways. Volatility, in a nutshell, is a measure of how likely stocks, bonds, and other securities are to rise or fall. You can learn more about volatility here.

What now?

Our best advice is to look at investing as a long-term plan. No one knows what the market will do today, next week, or next year. Even the experts make a lot of guesses. From 1928 through the end of 2017, even with periods of volatility, the S&P 500 index has produced gains of 9.65% annually.1 (TLDR – Consider  setting your Auto-Stash and enjoy the ride.)

What can you do today?

Here are three ideas to consider:

  1. Buy “Bonding with America”Bonds are great investments to hold during times of high volatility, or when you feel like you want to reduce your risk in stocks. Consider buying some bonds and holding them for the long term.
  2. Buy Your Mix – There are three flavors of a mix: Conservative, Moderate, and Aggressive. We recommend choosing a mix because it is a blend of both bonds and stocks, and you can think of it as a cocktail of investments to either complement your stock holdings or serve as your core holding at Stash. You will find the mixes in the “I want” category of investments. If you’re wondering what risk level you should pick, you can find our recommendations in your “account” screen. Read more about your mix investment here.
  3. Single Stocks – If you’re really in this for the long term and can handle some short-term risk, another option may be to keep buying your favorite stocks. This is called “buying the dip”, in Wall Street lingo. Remember to add smaller amounts on a regular basis so you can benefit from dollar-cost averaging. When stocks drop consider it a SALE! Who doesn’t love a bargain? The trick is to keep adding small amounts on a regular basis. You can either buy a small amount now or turn on Auto-Stash and let it happen automatically.
  4. Diversify – much of the market turmoil today is due to one sector—technology. (In fact, an index that primarily represents tech stocks called the Nasdaq is having its worst month since 2008.)When you diversify, it means you’re not putting all of your eggs in one basket, so you can better weather the stock market’s ups and downs. When you’ve diversified your portfolio, it will hold a variety of investments that are not all subject to the same market risks, including stocks, bonds, and cash, as well as mutual funds and exchange-traded funds (ETFs).

    By diversifying, you’ll also be choosing investments in numerous economic sectors—not just the hot industry of the moment—as well as in different geographies around the globe.

Whatever you decide, just remember that investing is for the long term, while selling is sometimes a knee-jerk reaction that you might regret.

Stash on

We created Stash to provide you with the education and tools to invest for yourself, for the long term, in all types of markets. No one can predict the future but we can say that investing on a regular basis (especially when the market is volatile) can be a  proven strategy for growing wealth.

We hope the three ideas above can help you diversify your portfolio and keep investing for the long term.

Have a great day.

Stash

1 See the historical data on the S&P 500 provided by http://pages.stern.nyu.edu/~adamodar/

By Stash Team

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This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Stash assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.

Furthermore, the information presented does not take into consideration commissions, tax implications, or other transactional costs, which may significantly affect the economic consequences of a given strategy or investment decision. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services, and should seek advice from an independent advisor before acting on any information presented. Before investing, please carefully consider your willingness to take on risk and your financial ability to afford investment losses when deciding how much individual security exposure to have in your investment portfolio.

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