Where to Put Your Money During an Economic Downturn

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Where to Put Your Money During an Economic Downturn

Posted On : Jul-08-2009 | seen (482) times | Article Word Count : 563 |

As the financial markets are melting down, people are terrified to put their money in any investment vehicle. Even the smartest and bravest investor will cower down and tightly hold his money as he watches major corporations fall down. Since people don’t know what do with their money, they started tuning in to CNN with the hopes of receiving professional financial advice. Some of it may be sound advice while some are considered too risky at this point in time. To be honest, knowing where to invest really depends on what your risk tolerance is. But fortunately, there are some investments that cater to all kinds of investors. Here are five good bets for your investment endeavors in the midst of this crisis.

Savings account or certificate of deposit (CD)

They say cash is king. While waiting for that perfect investment opportunity, consider hiding your money in a savings account because it gives you a return. What better way to store cash that can be easily liquidated than in a savings account? There’s a double benefit; storing and earning. Presently, savings accounts from ING provide an annual yield of 2.75%. This rate may appear to be small, but it can provide you large sum if you have a large principal. Further, some companies provide larger interest rates, ranging from 3% to 5% on a 12-month CD.

Exchange traded funds

Investing in Exchange traded funds (ETF) is another safe way for you to create a diversified portfolio. Purchasing an ETF is similar to buying a share, but the concept is rather different. A stock represents ownership of one corporation, while an ETF represents the whole index such as the S&P500 or Dow Jones. As a result, an ETF gives you immediate and total diversity. This is considered a safe bet because predicting an index is easier than keeping track of one corporation’s performance. Also, economic downturns can provide more predictable movements of an index, as the corporations that represent the index move in similar patterns. You can purchase ETFs from leading brokers such as Zecco, TradeKing, Scottrade and Marsco.

Corporate bonds

Bonds, in general, carry less risk than any type of investment because a bond is commonly referred to as a “promise to pay”. Bonds give significantly less yield, which is why corporations issue bonds during difficult times because they are easier to pay. A popular choice among this type of investment is the Investment Grade Corporate Bond Fund. This fund will give you a broad and diversified financial involvement with several major corporations such as Wal-Mart, IBM, Time Warner, and Johnson & Johnson. This bond fund pays dividends on a monthly basis and it current yield is 6.5%.

Mutual funds

This option may raise a few eyebrows, but investing in mutual funds is never a bad type of investment because they are professionally managed and diversified in such a way that the good investments can make up for the bad ones. The idea of a mutual fund is to balance the invested fund in stocks and bonds. There are plenty of great fund managers with brilliant track records. These include CGM Realty Fund and the CGM Focus Fund. Both are managed by investing legend Ken Heebner. You can’t go wrong when Ken Heebner is handling your money.

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<h1>Where to Put Your Money During an Economic Downturn</h1> Author: <a href='http://www.articleseen.com/profile_Yossarian Smythe.aspx'>Yossarian Smythe</a> As the financial markets are melting down, people are terrified to put their money in any investment vehicle. Even the smartest and bravest investor will cower down and tightly hold his money as he watches major corporations fall down. Since people don’t know what do with their money, they started tuning in to CNN with the hopes of receiving professional financial advice. Some of it may be sound advice while some are considered too risky at this point in time. To be honest, knowing where to invest really depends on what your risk tolerance is. But fortunately, there are some investments that cater to all kinds of investors. Here are five good bets for your investment endeavors in the midst of this crisis.

Savings account or certificate of deposit (CD)

They say cash is king. While waiting for that perfect investment opportunity, consider hiding your money in a savings account because it gives you a return. What better way to store cash that can be easily liquidated than in a savings account? There’s a double benefit; storing and earning. Presently, savings accounts from ING provide an annual yield of 2.75%. This rate may appear to be small, but it can provide you large sum if you have a large principal. Further, some companies provide larger interest rates, ranging from 3% to 5% on a 12-month CD.

Exchange traded funds

Investing in Exchange traded funds (ETF) is another safe way for you to create a diversified portfolio. Purchasing an ETF is similar to buying a share, but the concept is rather different. A stock represents ownership of one corporation, while an ETF represents the whole index such as the S&P500 or Dow Jones. As a result, an ETF gives you immediate and total diversity. This is considered a safe bet because predicting an index is easier than keeping track of one corporation’s performance. Also, economic downturns can provide more predictable movements of an index, as the corporations that represent the index move in similar patterns. You can purchase ETFs from leading brokers such as Zecco, TradeKing, Scottrade and Marsco.

Corporate bonds

Bonds, in general, carry less risk than any type of investment because a bond is commonly referred to as a “promise to pay”. Bonds give significantly less yield, which is why corporations issue bonds during difficult times because they are easier to pay. A popular choice among this type of investment is the Investment Grade Corporate Bond Fund. This fund will give you a broad and diversified financial involvement with several major corporations such as Wal-Mart, IBM, Time Warner, and Johnson & Johnson. This bond fund pays dividends on a monthly basis and it current yield is 6.5%.

Mutual funds

This option may raise a few eyebrows, but investing in mutual funds is never a bad type of investment because they are professionally managed and diversified in such a way that the good investments can make up for the bad ones. The idea of a mutual fund is to balance the invested fund in stocks and bonds. There are plenty of great fund managers with brilliant track records. These include CGM Realty Fund and the CGM Focus Fund. Both are managed by investing legend Ken Heebner. You can’t go wrong when Ken Heebner is handling your money. 
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If you have ever taken out any payment protection insurance it may have been mis-sold and you could be entitled to claim it back. Real Claims specialises in PPI Compensation Claims and can help you claim your money back. Alternatively if you face financial troubles Wilson Field offer free Debt Management Advice.

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