After more than a month of stock market turmoil, no one can predict how bad this correction will be. So here are some more investment strategies to safeguard your nest egg.
Hold cash. The return will be low, and will go lower as interest rates fall. But your capital is protected and having cash reserves enables you to move quickly when the time is right to buy. However, Gordon Pape of the 50 Plus website is warning against bottom-feeding, at least right now.
Stocks in the sectors that have been hardest hit , like U.S. financials and real estate, may look like huge bargains right now. Remember what happened to investors who went shopping for high-tech stocks in mid-2000 after the first wave of the collapse had passed. Those stocks looked like bargains then. Most turned out to be dogs. There will be a time to buy these beaten-up issues, but it’s probably not here yet.
On the other hand, don’t get spooked and sell everything at any price. Many investors did that in 2006 after the government announced that it would tax income trusts. Those who blew all their trust units out the door in reaction have long since come to regret it. Don’t make the same mistake now.