How to Get More Fully Invested

March 22, 2018

Do you have cash in your account that really should be invested?

When we talk with investors, we’ve found that many of them have more cash in their accounts than they needed.

Some were in cash because they’re waiting to buy into stocks at lower levels or because they’re worried about a potential market decline.

Others were in cash simply because they’re not sure where to invest it given that stock markets are volatile and bonds are facing rising interest rates.

Most of them knew that cash wasn’t doing much for them. It gave them peace of mind now, but it put their future life goals, like having enough money in retirement, at risk. Cash hadn’t kept up with inflation, so it was also slowly eating away at their ability to afford their same quality of life.

How to get more fully invested

They’d like to get more fully invested, but they end up waiting in the hopes of finding just the ‘right’ investment or the optimal time to buy.

Getting back in the market now probably isn’t going to be perfect. Fortunately, long-term investment goals like retirement don’t require perfect timing, but they do require being invested.

Start conservatively with bond funds

Here’s a simple first step back into the market that can increase your returns over time without taking too much risk: start with more conservative investments, like bond funds.

Bonds have outpaced cash over time, so they can help investors try to grow their assets while waiting for the opportunity to buy into stocks. Bonds have also been less volatile than stocks, and they’ve held up better in down markets, and that can help investors stay invested, even during market declines.

There are risks in the bond market, of course, such as rising interest rates, so it makes sense to invest in a fixed income strategy that can adapt to these changes, like the NoLoad FundX Flexible Income approach.

Many investors use index funds to get low-cost exposure to the bond market, but index funds may not be well positioned for higher interest rates.

The Bloomberg Barclays Aggregate Bond index is a common proxy for the overall bond market, and it includes mostly government bonds, which tend to be more susceptible to interest rate changes.

What about balanced funds?

Balanced funds, like those in NoLoad FundX’s Class 4 category, are another conservative way to step back into the market.

Balanced funds give you exposure to both stocks and bonds. If you’re concerned about a stock market decline, these funds have historically held up better than fully invested stock funds.

NoLoad FundX’s balanced fund portfolio is easy to follow, and it changes your allocation to stocks and bonds in response to changing markets. Over the last 10 years, it led investors to own funds that had more exposure to stocks when stocks were doing well and funds with less exposure to stocks in down markets.

Here’s the takeaway: It can be tough to let go of the stability of cash and take those first steps back into the market, but we’re confident that if you start conservatively, you’ll be up to the challenge.

Getting more fully invested doesn’t have to complicated, and it may not be perfect, but it’s the step you need to take to reach your goals.

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