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Strategies for Investing Cash

 

The stock markets are at all-time highs and don’t appear to be ready to change course any time soon. If you have a rollover from an old 401k or some saved cash, you may be asking yourself if this is the right time to invest that money. You may want to have your money invested right away so that you don’t miss the potential upside of the market or you may want to wait on some or all of your investing for fear that the market may pull back. When clients come to me with cash to invest, I typically offer them three options: invest the money all at once, invest over a period of time, or hold off and invest later. Each option has its pros and cons and should be evaluated to determine which is most appropriate for you.

Invest the money all at once: This strategy is akin to jumping into a pool and doesn’t work for everyone. I find that investing all of the money at once works better for people who have a rollover from their 401k or other employer retirement plan. The reason for this is that the money was already invested and has only been out of the market for a brief period of time. This is simply reinvesting the proceeds.
This strategy also potentially works for clients with higher risk tolerances. They are more inclined to not want to miss any opportunities in the market and are willing to accept some short-term losses should the market pull back. The advantage of this is investing all of your money with the potential to see it all rise over time. The obvious disadvantage is that the market could pull back and you could see immediate losses in your account.

Invest the money over a period of time:  This strategy is akin to gradually walking into a pool. For people with excess cash or clients who are more moderate risk takers, investing money once a month for three, six, or twelve months may be the ideal fit. By investing over a period of time, you’re dollar cost averaging the money into the market. This allows you to get some money in right away if the market goes up and to allow you to buy into the market if it goes down over a period of time. While this strategy doesn’t fully protect you from a market decline, it might soften the impact versus investing it all at once. It also limits your upside should the market continue going up from day one.

Hold off for now: For market timers, holding off for the time being and waiting for a market decline to invest the funds is also an option. Market timers are hoping that they are correct in projecting a market decline and that they’re able to buy at or near the market bottom. This strategy might provide some downside protection, but might miss out on potential gains prior to a market drop and relies heavily on the investor to accurately time the market bottom. Doing this may lead to missing any potential upside and buying in at a higher price than where the market currently stands.

None of these strategies assures gain or protection from loss. Each has its advantages and risks and should be weighed in coordination with your overall investment objective with your financial professional. You may even find that a combination of these strategies is ideal for you.

Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. An investor should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not assure a profit and does not protect against loss in declining markets.

Stock investing involves risk including loss of principal. All indices are unmanaged and may not be invested into directly.

The opinions voiced in this material are for informational purposes only and are not intended to provide specific advice to any individual. Consult your legal, tax, and/or financial advisor to determine what is appropriate for your situation.

 

 

PWM

Events & Sponsorships

May 4th & 5th 

Come visit Debbie at the Towsontown Spring Festival. They’ll have music, good food, carnival rides, and the not-to-be-missed Partnership Wealth Management booth!

May 11th 11am-5pm 

We’re excited to sponsor FreeState Justice’s Jazz Brunch event again this year. Come celebrate the victories and contributions of the LGBTQ community in Maryland at a great venue with wonderful music. Get tickets and learn more about the event here.

May 11th 11am-5pm 

We’re also a sponsor for the 4th Annual Baltimore Wine & Food Festival in Harbor East. Come visit Debbie at our booth while enjoying great food and local wine. Get your tickets today!

In the News

Maryland Department of the Environment 

The Maryland Department of the Environment celebrated the 10th anniversary of the Maryland Green Registry earlier this month and has recognized Partnership Wealth Management as the first business to join. In case you missed it, here’s their Facebook post.

Baltimore Business Journal 

Woody was named a 2019 Leader in Diversity by the Baltimore Business Journal (BBJ) . Woody, along with the other honorees, will be recognized in the June 7th Baltimore Business Journal publication and June 6th at the BBJ’s annual awards ceremony. Here’s a link to purchase tickets if you’d like to support Woody as he receives his award.

Away from the Office

May 27th  

Our office and the markets will be closed on Monday, May 27th for Memorial Day.

We are always accepting donations for the local animal shelters– toys, tennis balls, collars, leashes, food, cat litter, cardboard trays, office supplies, cleaning supplies, towels, mats, washcloths, etc. We will accept donations Monday-Friday between 9am & 5pm.

 

Family

Easter was a hit! Every holiday seems to be even more fun this year for Elise than in past years. Four is such a great age for holidays. She’s truly getting the maximum enjoyment out of each.

For us, Easter started on Thursday when Elise’s school had a party and egg hunt. Elise was hooked!

Heidi set up another egg hunt at the house on Friday and Elise couldn’t wait for Saturday for her next hunt. She asked me if we could do more. While I was able to negotiate my way out of filling the eggs with her toys, I wasn’t quite ready for the number of egg hunts we’d be doing. Because Elise was just as happy to hide eggs for me to find as she was to search for them herself, we alternated hunting and hiding twelve times.

Saturday’s egg hunt at Patterson Park was incredibly well run and a wonderful family-friendly morning of hunting, playing at the playground, fun kids’ activities, and all the popcorn and cotton candy kids could eat.

On Sunday, Elise got to search for her Easter basket as well as her 9-month -old cousin’s. It’s hard to believe that we had the time to do anything but egg and basket hunting, but we were able to visit with family from out of town all weekend as well.

I hope you enjoyed this month’s newsletter.

Best Wishes,

Woody Derricks, CFP®, ADPA®

President

CA Insurance License #0C40217