Higher inflation and interest rates might be causing some Missourians to be extra cautious about their spending. When deciding whether now is a good time to invest, Missouri State University Finance Professor Jeff Jones said it is always a good time to invest.
He advises Missourians to have a diverse portfolio.
“Whether it be stocks, whether it be bonds, whether it be real assets like real estate, whether it be alternative assets like commodities, the important thing is have a diversified portfolio, so that you spread your risk. And some things may perform well in certain periods, other things may not perform as well, but those things can help offset each other. Decisions regarding ‘I’m only going to invest in this,’ that’s when sometimes you can look like a genius, but at the same time you can also lose a substantial amount of money,” Jones told Missourinet.
He said now is a good time to consider having a reasonable amount of bonds in an investment portfolio.
“If interest rates go up, bond prices tend to go down, and vice versa. So if we’ve had kind of this period of increasing interest rates, and we think that interest rates may be cut or go down in the future, and maybe that’s an area that over the next two or three years, you could have some decent returns,” said Jones.
He advises Missourians to remove emotion when making investment decisions.
“What we’ve seen, at least in the last couple 100 years, is that markets always come back,” said Jones. And so oftentimes, if people are yelling fire and running out of the building, the best investment strategy has been to run into the building. So, kind of this contrarian idea of when things are really bad, maybe that’s the best time to be investing.”
Jones said to also consider what industries to invest in.
“You want to look at things like that have a lot less risk, like consumer staples, right? So that would be an area that you know, regardless of whether the economy is doing really well or really poorly, you can generally kind of count on reasonably stable returns from that sector. You may want to avoid something that is very cyclical in nature,” he said.
He calls cryptocurrency a “speculative device.” Jones said he’s not sure what the future holds for cryptocurrencies.
He said having a little cryptocurrency in a portfolio is okay, but he would have huge concerns if someone puts half their investments towards the digital, encrypted money.
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