Although you cannot predict the performance of the S&P 500 Index for the next 20 years, at least you know you are in very good company. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Having cash on hand allows you to move quickly and secure great deals if (when) the market collapses. has had a much more impressive run.
Best Way to Invest $10,000. THEN you can invest the remaining funds using one of the strategies below. Microsoft may earn an Affiliate Commission if you purchase something through recommended links in this article. In the period from 1987 to 2006, the market suffered a steep crash in October 1987, followed by another severe crash in 2001-02, but it still managed to return an average of 11.3% with dividends reinvested, which is an 8.5% inflation-adjusted return. Likewise, the market roared back following the 2008 financial crisis to the longest bull run on record. For investors worried about inflation, the central bank’s relentless money printing policies and the risk of another market crash, gold is the ideal hedge. As of this writing, S&P 500 ETFs can be found with expense ratios as low as 0.03%. No one knows how long the economic recovery will take. has had a much more impressive run. If the strategy works for Buffett, it should work for ordinary investors like us. If you’re worried about another market crash in 2020, there are three ways to protect yourself: cash, gold or defensive stocks. Lower stock prices generate higher effective dividend yields, not to mention a more attractive buy-in price.It's true that Altria's stock is taking a beating for good reason. Market crashes are immensely destructive, but they also present opportunities for savvy investors.
Why I invested $10,000 in the stock market during a selloff.
If the strategy works for Buffett, it should work for ordinary investors like us. Here’s how I would deploy $10,000 to mitigate the downside risks.
The coronavirus scare isn't even the main issue here, as the company is under investigation for its handling of a $12.8 billion investment in e-cigarette maker Juul. Patience is a virtue in the stock market, and doubly so for dividend investors.Furthermore, dividend investors really don't mind if share prices dip once in a while, or even stay low for several years. Analysts who follow this method seek out companies priced below their real worth. The , an exchange-traded fund that tracks gold, is up a whopping 38% year-to-date. The ongoing crisis has made it clear that some businesses are simply too “essential” to suspend.
Returns as of 08/01/2020. Here’s How I Would Invest $10,000 if the Market Crashes AgainAnother stock market crash could be just beyond the horizon. Indeed, over long-time horizons, the index typically produces better returns than actively managed portfolios, especially after taking into account taxes and fees. If you’ve got $10,000 to invest, you’re off to a great start. Because past performance is no indication of future performance, no one can say whether the stock market will perform the same way in the next 20 years. People often use the S&P 500 as a yardstick for investing success. Show full articles without "Continue Reading" button for {0} hours. Show full articles without "Continue Reading" button for {0} hours. In fact, a number of noteworthy hedge fund managers have been betting on gold recently, which bolsters the thesis further. Stocks suffer through rough years and broad downturns from time to time. With that, you could expect your $10,000 investment to grow to $34,000 in 20 years. When the market punishes high-quality stocks, it enhances the long-term growth potential for investors willing to take the plunge.