How to Hold Onto Your Money, Wherever the Market Takes You

Optimism in investing these days often resembles the pessimism of only a few years ago.

Until the coronavirus struck in the United States earlier this year, upbeat forecasters invariably expected that the economy would expand: The only question was how quickly it would grow. Now, even in the best of circumstances, the economy will be smaller on Dec. 31 than it was at the beginning of this year, and nearly everyone agrees that without another dose of fiscal stimulus, prosperity will slip further from many people’s grasp.

What’s more, the world remains afflicted by a lethal pandemic and the United States is enduring a vituperative and divisive election campaign. Maintaining a laserlike focus on the stock and bond markets amid these crises is a challenging, if not impossible, feat.

Still, investors who have stuck with stocks despite all of the gloom have reaped great rewards, while bond investors have held onto their capital, even if they haven’t generated much income. Those who shudder at the current state of the world can still hope — and plan for — a better day.

Maintaining a well-tempered view of the future is, after all, a cornerstone of long-term investing. Without enough optimism to justify taking at least some risk, your money won’t grow in the years ahead. But without sober regard for the potential for further disasters, you could easily squander your chances for a prosperous future.

Take the stock market in the three months through September. If you were too frightened by the disarray and the disease spreading around the world to hold stocks, you would have missed an 8.5 percent gain in the S&P 500 on top of the roughly 20 percent gain of the previous three months. Yet the stock market collapse of February and March is still too recent a memory to encourage much exuberance now. What is an investor to do?

We’ve got some suggestions on ways to hedge your bets, and plenty of analysis and perspective, in our quarterly report on investing.

The stock market has exceeded most people’s expectations in the months since it hit bottom in late March. Strategists are divided on where it will go now, and on which market sectors are the best bets for the next several months.

U.S. Treasuries have been the bonds of choice for safe retirement income. But interest rates are extremely low — and seem likely to remain so for years go come. As a result, they could deliver no real return for the next decade, pushing retirees into other holdings, including annuities and stocks.

He has been working and saving for decades but one day he had a happy realization: He really doesn’t need anything else. It’s time to turn his attention to other things, including aiding those who are more needy.

When you need a place to park your money, money market funds have typically been a convenient choice. Now, with interest rates near zero, some funds are shutting down but many are waiving their fees.

The yield from a dividend fund can beat the scant rates paid these days by Treasuries and investment-grade bonds. But as always in investing, there is a price: You must be able to stomach the ups and downs of the underlying stocks.

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