The year has really just begun, and while the broader stock market has struggled, there is still a lot that you can do to ensure that your investment portfolio bloom in the spring. A good idea is to focus on your overall performance allocation rather than trying to find the “right” stock that may or may not explode in the next few months.
Long-term investments are just that: long-term investments.
Global diversification is scary at the moment, but it is a necessity for a well-rounded portfolio. Stocks in Europe and China, for example, are falling quickly, but many of these companies will rebound with stronger values. Adding a little bit of global diversification should be something that everyone is doing in 2016.
Bonds are still a safe bet, but returns are rather lackluster at the moment. Rising interest rates will cause bond values to fall, and the Federal Reserve is expected to raise interest rates at least once or twice this year, with optimistic pre-forecasts indicating four rate hikes. Bonds help cushion stock market volatility, and they should play a role in every long-term portfolio.
This can be seen as a little bit of spring cleaning before you dive into your investments. Three investments that we recommend, include:
1. Index Funds
You should be looking into index funds. These funds allow you to save time, and you don’t need the same diligence as you would when picking individual stocks. A few of the best index funds include:
- Vanguard 500 Index Fund: A low-cost investment fund, you’ll be charged a rate of just 0.05% for every $100 that you invest.
- Vanguard Small-Cap Growth ETF: Small cap stocks often can provide better returns than larger stocks, and they should also be a consideration.
Index funds are often seen as “safe bets,” and should be included in any long-term investment strategy.
Bonds don’t provide the same attractive returns as stocks, but they are a necessity for a well-rounded portfolio in 2016. Markets are fluctuating too greatly at the moment, and you’ll need a wide range of bonds to really perform well the spring.
A few bonds to consider, include:
- 10-year bonds
- Foreign bonds
And don’t be afraid to look towards several bond funds, such as:
- Rowe Price Tax-Free High Yield
- USAA Tax Exempt Intermediate-Term
- Vanguard High-Yield Tax-Exempt Fund
3. Hot Stocks
There are a lot of hot stocks going into February that should be considered for your portfolio. While you’ll want to do your own due diligence, a few of the most promising stocks include:
- Total System Services (TSS)
- American Express (AXP)
- Snap-on Incorporated (SNA)
- Alphabet Inc (GOOG, GOOGL)
Start to diversify your stock portfolio, and be leery of going into energy stocks or oil-related stocks in the near future.