What should you do? If you keep hearing the market is sort of “toppy” and “at the end of its bull run” then what do you do? Should we be taking money out of the market completely so that we can ring the register on all our gains or is there a better option? Maybe investing in Dividend stocks instead?
If you ask your neighbor or friend they might tell you it’s time to get out of the market because it’s just too risky to be in it right now. Although that could be right, it’s also possible to be wrong for a good while longer. You could also argue that putting money into the market is always “risky” and that’s especially true in relative terms. What’s risky for me might not be for you. One thing is for sure though, and that’s the long history of the market eventually going back up.
Instead of selling out of the market “park” your money with dividend stocks
If you want to lower your risk, but stay in the market then it might be a good idea to move some money around into some dividend paying stocks. Dividend stocks can give you more stability than most of the other stocks you have to choose from. Not to mention they also provide you with a pretty consistent income flow.
Instead of selling out and completely getting out of the market you can instead sell and then get into a stock that has a proven track record and has also been paying out a good dividend to its investors.
Of course, there’s no sure thing in the stock market, but you’d do well to choose a good dividend paying stock that has been in the market and doing its thing for decades. These types of stocks are usually the ones that do the best when there’s downturn in the market.
Get global exposure while keeping it lower risk
I’m talking about companies like Mcdonalds and Coca Cola. These are US based companies but they have a strong presence around the world. Both of these companies will give you just over 3% in dividends, and both of them have lots of exposure overseas.
What does this exposure around the world do for you? Let’s say there’s a recession here in the US, or maybe in some other country. When you have exposure all over the world you’re more likely to be hit less by the recession than other companies that don’t have the same exposure.
People don’t usually sell dividend paying stocks first
Let’s say that the whole market decides to tank. What will happen to your stock then? If you have your money in a bunch of strong dividend paying stocks, like Procter and Gamble or Coca Cola for example, then you’re going to be just fine. Why? Because other smart investors are thinking just like we’re thinking. They’re a lot less likely to sell dividend paying stock because they generate income for them, and they’re also more likely to recover than some other random stock.
That’s even more true in the long term where you can expect them to come back in full force and continue providing you with income with their dividends. Their dividends that have a long history of paying their investors diligently even during the bad times.