Today, once again, we are seeing investors panic over fears that this economy will never find its footing.
It is usually (read: always) wise to step back for a moment and look at the alternatives you have for investing your money. Here are some that come to mind:
1. Your mattress. 0% return and pray you don’t get robbed or have a fire.
2. 10-year treasuries. 1.75% yield BEFORE taxes and inflation. About equal to the mattress.
3. High-quality, dividend-paying stocks … you know the type—like Johnson & Johnson®, or McDonalds®, (not recommendations … speak with me about your particular situation). Some of these types of stocks pay you 3% to 4%, and in many cases, raise their dividend every year. That means more income today and increasing income tomorrow. For most, this is way superior to options 1 and 2, which really are not options at all. (If you are one of my clients you already have this stuff, like the old Prego commercial, “It’s in there.”)
One thing about investing has always baffled me. Every place we shop, we are always more likely to buy when things are on sale. That new big screen TV. That “buy one get one free” deal at the local mall. But when stocks are finally “on sale” most of us are too scared to buy. And worse yet when thing are “at an all time high” like gold, tech stocks… people tend to buy?
Nothing, as far as I know, has changed with Johnson & Johnson or McDonalds or many other companies like them—except that you can become a part owner of these great companies for less than you could have yesterday for no good reason.
The best part of a structured, disciplined portfolio is that the emotions are extracted and the discipline stays in and volatility translates into growth later, hopefully, not much later.
So let’s go shopping!