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| Where do we go from here? Our portfolio is growing but what should we do now? |
I've been following the economic news closely for several months. I think can sum it up succinctly like this: the RETAIL APOCALYPSE is here, hey lots of jobs, We're all doomed to recession!, hey lots of jobs, these jobs suck they don't pay anything, we just passed $15/hour minimum wage, what happened to the jobs?, oh, jobs. Have I missed anything? The economy has never looked like this. And no one knows how to understand it.
On the one hand, every time someone says a recession is coming I think maybe I should cash out some of my positions and invest more conservatively. On the other hand I'm trying to maintain a buy-and-hold strategy. You're not supposed to panic about recessions. They come and go and if you hold through the recession you don't lose anything.
I think some of the people who walked away from their houses in the Great Recession may have made a mistake. If they didn't lose their jobs and they could still make the mortgage payments, they should have held on to their properties. They would have recovered their home values by now and they'd have a lot more equity in their homes. I can understand why people who lost their jobs or some of their income gave up their homes. They had no choice. But some homeowners, by all accounts, could have stayed in their properties.
Should We Continue Investing New Money? My wife and I build up cash balance in a money market fund. We can't contribute much but whatever we put in there grows a little bit. About twice a year we use some of that money to buy more shares in mutual funds.
We've been thinking we should wait to see what happens. But we're unsure.
Should We Look for Other Investments? A friend of mine said he is looking at dividend mutual funds. There is one Dividend Aristocrat ETF he likes. A Dividend Aristocrat is a company that pays a dividend every year for at least 25 years. There aren't many of them as you can imagine.
Companies that pay dividends year over year maintain good value in their stocks but that doesn't mean the stocks are constantly growing in value. Switching to dividend investing requires some thought.
Should We Change Our Investment Strategy? We now have enough money saved up that we could buy a rental property. It would be small. My gut feeling is against this. I've read that being a small rental property owner is a lot of work.
Another way we could invest in real estate is to put our money into a Real Estate Investment Trust. REITs were once very popular but the market has been cooling. We're considering this because the economy has been growing for a long time now. Maybe it's stronger than most people realize. Instead of saying, "Well, the economy has been recovering for 10 years - time for a recession" we're thinking it might last a bit longer.
REITs that survived the last recession may be in a better position to survive the next one.
Should We Just Hold Everything As Is? We could just continue building up our cash position and leave everything else as it is. If the market crashes we'd have a little bit of cash to pick up some deals.
Since we're so unsure about everything this will probably be our strategy for now. But I'm no expert at knowing when the stock market is recovered from a crash.
