Mr. Market's recent wild mood swings have a lot of investors worried -- and confused. Should you sell your stocks and move your money to something safer like a CD, or should you double-down while prices are low? It's true that bonds, CDs, and money market funds tend to get very popular during times of intense volatility, but they come with disadvantages of their own. One of the biggest of those disadvantages is that over time, you probably won't make nearly as much money in bonds or CDs as you would have in the stock market.
Fortunately, there's a way to invest that can spare you from much of the volatility -- and can even turn it to your advantage. The secret? Steady stocks that pay dividends. There is a place for higher-risk, higher-growth-potential of stocks in your portfolio. But I'd argue that the cornerstone of your stock portfolio should be made up of slower-movers: Big-name, well-run businesses with a long history of solid dividends that can be reinvested. In times like this, moving assets toward those kinds of stocks can help shield you from the worst of the volatility -- while still giving you some growth.
Source: Motley Fool
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- How To Maximize Your Dividend Stocks' Earnings
- High Yield, High Risk Dividend Stocks
- How Much Money Will You Need For Retirement?
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