If you have a lot of money to invest, you might be a little hesitant to enter the market right now. The S&P 500 lost 4% in just a few days earlier this month. And the Nasdaq slipped more than 6%. Both indices have recovered some of those losses, but they are still struggling.
It doesn’t mean you have to stay out of the market. In fact, now is the perfect time to invest. In some cases, you will get shares back cheaply. And as for stocks that haven’t fallen much, you’ll find they have the ability to hold up when times get tough. So, without further ado, let’s see how you might consider deploying $ 50,000 in the stock market right now.
It is always a good idea to include a few “safe haven” stocks in your portfolio. By that I mean those who offer a track record of earnings and performance – and might even pay a nice dividend. Often times, healthcare companies will do the trick. People generally cannot give up their products and services, so even during tough times we can count on revenue growth. I would invest about $ 15,000 in these stocks.
Johnson & johnson (NYSE: JNJ) is a prime example. Annual profits and revenues have grown over time – and today, they exceed $ 14 billion and $ 82 billion, respectively. The large pharmaceutical company has demonstrated its ability to reward long-term investors: the stock has climbed 160% in the last decade. J&J is also among the dividend elite: he’s a Dividend King, which means he’s been increasing his dividend for at least 50 consecutive years.
Abbott Laboratories (NYSE: ABT) is another solid choice. The company sells medical devices, diagnostics, nutrition products, and pharmaceuticals. Abbott is now profiting – and probably for the foreseeable future – from the sale of its COVID-19 tests. They generated $ 2.2 billion in revenue in the last quarter. Like J&J, the company has increased its profits and revenues over time.
The stock has climbed over 360% in the past 10 years. And he has increased his dividend for over 25 consecutive years, making him a dividend aristocrat.
Add growth to the mix
You can also include a few high-growth players in the mix if you’re okay with a little bit of risk. Moderna (NASDAQ: ARNM) is a biotech company with only one product on the market – but it’s a big one. Its coronavirus vaccine has already made the business profitable – after only a full quarter of marketing. Moderna’s stock has climbed about 125% over the past year. But that doesn’t seem expensive considering the income; the stock is trading at less than 7 times the expected profit estimates.
Your next step could be an investment of around $ 15,000 in a basket of stocks that could benefit in a post-pandemic world. Here I think of the entertainment giant Disney (NYSE: DIS) and cruise operator Carnival (NYSE: CCL) (NYSE: CUK). Disney recently reopened its California parks, and with the reopening of Disneyland Paris in June, all Disney parks will be back in business. Carnival announced this week that three of its cruise lines will resume cruises to the United States in July.
Now when I say you might think of adding Amazon (NASDAQ: AMZN) and Target (NYSE: TGT) to this basket you might say: Wait a minute – they both benefited from this during the pandemic. True. But experts expect the popularity of e-commerce to continue. Target and Amazon are proving it’s likely with strong first quarter earnings reports. Retailers increased their sales by nearly 23% and 44%, respectively.
A superstar fund
Finally, I would take advantage of recent declines to invest around $ 10,000 in one or more funds that have performed well over time. The one I’m thinking about right now is ETF Ark Innovation (NYSEMKT: ARKK). The added bonus is that it is led by star investor Cathie Wood. The Ark Innovation fund has grown by over 480% over the past five years. That’s against a 183% gain for the Nasdaq. Since the start of the month, Ark Innovation has fallen by around 11%.
What to do with the money left over from your investment budget? Even though there are many buying opportunities, I would still put $ 5,000 to $ 10,000 as the opportunity fund. I would use this money in the weeks or months to come to add previous positions or buy shares of another company that was not on my radar earlier.
Of course, you don’t need $ 50,000 to follow this plan. You can reduce (or increase) it depending on your budget. And you can also adjust according to your comfort in the face of risk. This is a key factor when building a portfolio.
So if you are a long term investor there are many smart investment choices in this market downturn. And that will be the case even if the market collapses.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.