Is Now a Good Time to Invest?
With higher inflation and interest rates, some Missourians are cautious about investing. However, Dr. Jeff Jones, certified financial planner and head of finance, economics, and risk management at Missouri State University, asserts that it's always a good time to invest. He emphasizes the importance of having a diverse portfolio.
Why a Diverse Portfolio Matters
“A diversified portfolio, including stocks, bonds, real estate, and commodities, spreads risk and offsets poor performance in some areas,” says Jones.
- Stocks: Shares in companies
- Bonds: Loans made to companies or the government that pay interest over time
- Real Estate: Property investments
- Commodities: Physical goods like gold, oil, or agricultural products
Invest in Bonds
Jones suggests considering bonds in your investment portfolio. Bonds can provide potential returns if interest rates decline.
For instance:
- If interest rates go down, bond prices usually go up, leading to profit.
Stay Calm and Invest Steadily
Jones advises investors to keep their emotions in check because markets historically rebound. This means that even if the market goes down, it usually recovers over time.
Low-Risk Sectors
He recommends investing in low-risk sectors like consumer staples—everyday products such as food and household goods. These items are always in demand, regardless of economic conditions.
Be Cautious with Cyclical Industries
Highly cyclical industries, such as automobile or travel sectors, can be risky. Their performance often fluctuates drastically with the economy.
Cryptocurrency: Approach Carefully
Jones sees cryptocurrency as a speculative investment and advises limiting its share in a portfolio.
Example:
- Cryptocurrencies can be highly volatile, meaning their value can change dramatically in a short time.
Summary
In summary, Dr. Jeff Jones believes that investing is always a good idea, provided you keep your portfolio diverse, remain emotionally steady, and pay attention to the economic context. Prioritize low-risk sectors and be very cautious with speculative investments like cryptocurrency.
