If you buy [stocks] you believe in, you can just buy them and hold them.
Troy Toups, founder and wealth manager of Toups Wealth Management
The COVID-19 pandemic has caused millions to lose jobs and triggered historic fluctuations of the stock market. But while many people have seen their savings in retirement plans drop considerably, financial experts advise that those with some extra cash during this time can still find savvy avenues to invest.
Jill Knight Nalty, business development officer for Argent Trust Company in New Orleans, said investing is a good idea at any time, but especially now if someone has extra cash after paying down debt and ensuring they have financial reserves equal to three to six months of their salary, but ideally 12 months.
When it comes to investing, she advised to “assess your personal risk tolerance, as well as your time horizon. Diversification is always key when investing, but you also need to make sure your risk tolerance is aligned with your investment strategy. Consider dollar cost averaging over time as opposed to putting all of your extra cash to work at once.”
Emmett G. Dupas III, lead partner with Bienville Capital Group in Metairie, noted that investing has different meanings for everyone, and advised that, “It’s important to match your risk with your time horizon.”
He added that treasury yields and savings are earning very little currently, but they have safety of principal in mind.
“Ask yourself if you are looking to earn more than what those offer,” he said. “Bonds, corporate, mortgage and higher yield, typically provide you with higher income but have additional risk. You must determine if you are looking longer term and wish to invest in the stock of a single company, or a mutual fund which may own hundreds of companies for diversification purposes.”
Troy Toups, founder and wealth manager of Toups Wealth Management in New Orleans, agrees that investing right now is wise.
“We have had a market that has gone up since essentially 2009, and here we are in 2020, and we have the opportunity to buy good, quality stocks when the market is down,” he said. “We’re not saying put all of your money into it, but if you buy [stocks]you believe in, you can just buy them and hold them.”
That’s why Toups’ top recommendation to clients is to “buy what you know.”
“Regardless of what’s going on with the virus, try to think of things that people are going to continually use — they are going to pay their cell phone bills, so think Verizon or AT&T,” he said. “We like the S&P 500, which is the 500 largest U.S. companies. There are low-cost options there.”
Still, everyone’s situation is different, which is why Toups noted it’s important to work with a financial professional.
“A lot of our clients work in the oil industry and not only have their accounts gone down, but they are concerned about losing a job and it’s very hard to get one these days,” Toups said. “For someone in that situation, their time horizon might be a little bit shorter because they don’t know how long they will be employed for.”
But, he adds, if one takes a certain portion of their money and makes sure it’s safe for when they need it, then it’s OK to invest, even if the markets continue to fluctuate.
“I am optimistic and would like to think that over the next two years, the stock market is going to be up,” Toups said.
Jeremy Jacobson, president of Metairie-based RBI Group, said his investing advice is all about demographics.
“If you’re younger and have a long-term time horizon, the first thing I would do with any excess cash, if you have the ability is maximize a 401K,” he said. “It’s the best bang for your buck.”
Jacobson added that bonds are a good option to consider.
“You don’t want to go 100% into the stocks; you want to have some bond exposure too, not only for the potential return, but bonds don’t have the same type of volatility as stocks,” he said. “In the event that the market was to take another leg down, you would have some money in bond funds that you could rebalance into stocks when they go on sale.”
