A good question is where to park safe money?

[261252]

Where to park safe money to avoid selling low in downturn ? and how long should safe money last as you are tying up capital ? or should you just say fuck it and let the dice roll ?


1 Ladder GICs then have some mature every month?

2 Bonds do well in downturn so ladder them as well you will collect interest through scheduled payments (called coupons) or buy bond ETF ?.

3 Saving account ETFs which put your monies into the best paying saving accounts they can find then pay you the interest and your principal never changes but at 5% interest that is only 5K per year for every 100 K invested so you are tying up all that money waiting for a serious downturn that may not happen

 

[Zoot Allures]

The answer to this hard question is simple but it does depend on your situation

Myself, I should have enough monthly income to pay for essentials so I have decided to keep money fully invested because if you put money away for eventual downturn then the market drops by, say, 30% but in the meantime it rose by 40%, as you waited for the downturn, you have lost 10% in your cautiousness

Market timing is impossible but you have to understand your own needs and , more importantly, your own character to absorb loss without panic selling. If you cannnot stomach big losses
then invest safely but that comes with the cost of less return as the golden rule of the market is the lesser the risk the lesser the return but a caveat is avoid greed like hedge funds , derivatives, going short etc thinking you will get rich overnight

When the market falls it is an excellant time to buy, not sell

 

[Butler1000]

Where to park safe money to avoid selling low in downturn ? and how long should safe money last as you are tying up capital ? or should you just say fuck it and let the dice roll ?


1 Ladder GICs then have some mature every month?

2 Bonds do well in downturn so ladder them as well you will collect interest through scheduled payments (called coupons) or buy bond ETF ?.

3 Saving account ETFs which put your monies into the best paying saving accounts they can find then pay you the interest and your principal never changes but at 5% interest that is only 5K per year for every 100 K invested so you are tying up all that money waiting for a serious downturn that may not happen

Canadian banks and don't sell. Hold, take the dividend for whatever. It will always come back. Hell they are considered a safe Investment so you may see a rise in the price.

Simple rule. It's all paper losses until you sell. Blue chip always come back.

 

[Zoot Allures]

Canadian banks and don't sell. Hold, take the dividend for whatever. It will always come back. Hell they are considered a safe Investment so you may see a rise in the price.

Simple rule. It's all paper losses until you sell. Blue chip always come back.

Consider the amount of investment you need to live off of dividends if they pay 5%?

Also, bank stock and their dividends do fall is a downturn. It is bonds which can actually
rise in a downturn but they will usually fall half of the market fall

 

[Butler1000]

Consider the amount of investment you need to live off of dividends if they pay 5%?

Also, bank stock and their dividends do fall

He is looking for a safe space with continued growth possibilities. No guarantees except GIC's really. As far as that goes this is one of several options.

Obviously diversity in his portfolio is best. If he did 20% of this it would be a good choice if he is more concerned about holding what he has than trying to time and read the Stock Casino.

 

[Zoot Allures]

He is looking for a safe space with continued growth possibilities. No guarantees except GIC's really. As far as that goes this is one of several options.

Obviously diversity in his portfolio is best. If he did 20% of this it would be a good choice if he is more concerned about holding what he has than trying to time and read the Stock Casino.

I see your point

Tying up all that money in a GIC waiting for a downfall is lost monies where dividend stock still grow even after the dividend payout which you can refuse and it automatically gets reinvested but dividend
companies do stock buybacks instead of a dividend they are not obligated to pay but that will increase the value of your stock so it is the same thing as a dividend payout

You need to access what monies you will need from the market for 5 years
in case of a serious recession down fall although the depression was 20 years

 

[HungSowel]

HSUV ETF holds interest bearing stuff, current interest rate is ~4.5%, the neat thing about this fund is that the interest accrues into the ETF price so if you need the money then you sell the ETF and your gains will be taxed as capital gains, the catch is that you can only buy it with USD even though it is on the TSX. The Canadian dollar version is HSAV which currently pays out ~3.6%, there is a premium for the Canadian dollar version. Interest income gets the worst tax treatment and for most people capital gains gets the best tax treatment, I have no idea how HSUV and HSAV is able to do what they do and how long before the government forces them to stop, while the ride is available you might as well ride it.

My non-committed cash is in HSAV, I would do norberts gambit to get USD to buy HSUV but I am getting a 1% bonus from wealthsimple if I keep my money with them for a year and I do not want to move money around and risk losing that bonus. For new money that I want to keep liquid, I will buy HSUV.

 

[Butler1000]

I see your point

Tying up all that money in a GIC waiting for a downfall is lost monies where dividend stock still grow even after the dividend payout which you can refuse and it automatically gets reinvested but dividend
companies do stock buybacks instead of a dividend they are not obligated to pay but that will increase the value of your stock so it is the same thing as a dividend payout

You need to access what monies you will need from the market for 5 years
in case of a serious recession down fall although the depression was 20 years

I keep wondering if a depression is possible in the Central Bank era. Allowing that kind of collapse would imo result in serious social unrest in the Western world. Hell China would be a powder keg. We already saw how much money they are willing to print during Covid. Add in its a very different economy with very different rules. The general public, especially in north america, have not seen 1930's type poverty on that mass scale.

Recession absolutely. Stock correction same. High unemployment yes. Bread lines? Hobo phenomenon? The public would lose it. Start burning shit down.

 

[jeff2]

Where to park safe money to avoid selling low in downturn ? and how long should safe money last as you are tying up capital ? or should you just say fuck it and let the dice roll ?


1 Ladder GICs then have some mature every month?

2 Bonds do well in downturn so ladder them as well you will collect interest through scheduled payments (called coupons) or buy bond ETF ?.

3 Saving account ETFs which put your monies into the best paying saving accounts they can find then pay you the interest and your principal never changes but at 5% interest that is only 5K per year for every 100 K invested so you are tying up all that money waiting for a serious downturn that may not happen

Depends on which account you are talking about. Non registered(high tax for interest income),TFSA,RRSP?
I sold some ZST about a week ago and was going to put it in the Canadian index and didn't do it yet and missed out on 3%.
In general, the market, especially U.S. is expensive on just about every measure. But that is a long term thing. This may mean nothing in the short term.
These days, you have got the big U.S. tech companies that are asset light and employee light and therefore very profitable.

 

[chungk7069]

The answer to this hard question is simple but it does depend on your situation

Myself, I should have enough monthly income to pay for essentials so I have decided to keep money fully invested because if you put money away for eventual downturn then the market drops by, say, 30% but in the meantime it rose by 40%, as you waited for the downturn, you have lost 10% in your cautiousness

Market timing is impossible but you have to understand your own needs and , more importantly, your own character to absorb loss without panic selling. If you cannnot stomach big losses
then invest safely but that comes with the cost of less return as the golden rule of the market is the lesser the risk the lesser the return but a caveat is avoid greed like hedge funds , derivatives, going short etc thinking you will get rich overnight

When the market falls it is an excellant time to buy, not sell

thats been my approach lately. accumulate cash and sell some losers and take some profit. i will be ready when the market drops. biggest problem with selling everything is no one knows where the market is headed. since the trump win, i made nice gains in everything i own and would have regretted selling at what i thought was the top. it requires balance and like OP said, ability to stomach losses.

 

[Liam011]

As others have said, it needn't be a "this or that" approach. Without a full idea of the OPs portfolio and risk appetite it is hard to say as well. Your IPS should tell you what your allocation to equity and fixed income should be based on your timeframe.

I will say (completely IMHO) stay the fuck away from bond ETFs. I personally have never had a return worth a shit with them, they became completely illiquid during the last downturn (precisely when you needed liquidity) and they offer equity like risk for fixed income (or worse) levels of return. If you want bonds, buy individual issues. Myself, I stick to GICs and HISAs for the income allocation.

 

[Robert Mugabe]

I completely got out of the market a few months ago and parked my cash. Every morning I would turn on my computer and see I was down a few grand. Sometimes as much as $5000 in a seven day period. Lost about 40 grand in a few months. I talked to the bank and they told me because my money was in US funds, the US dollar was losing against the Canadian dollar. I checked and it wasn't so. Never did get a straight answer.