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  • Writer's pictureRob Edwards

Getting Your Investments Back in the Fast Lane


 

As inflation continues to show signs of cooling, the Federal Reserve has signaled that it intends to cut short-term interest rates at least three times in 2024.


For income-oriented investors, this means that those high-yielding CDs, Treasury bills, and money market funds are coming to an end. These short-term investments helped provide stability, certainty, and attractive yields during a time of uncertainty. But, as recession fears fade, investors are now asking:  How do I put cash back to work in the stock market?


While it’s a simple question, it’s one of those decisions that can be paralyzing as we fear that we may make the wrong decision at the worst time. However, the solution doesn’t have to be overwhelming or complex. In fact, investing cash back into the stock market is analogous to merging your car onto the highway!


So, whether it’s a fast-moving highway or market, we can apply the same decision-making framework to help get our investments back on track:


IMMEDIATELY: Before getting onto the highway, we use the on-ramp to get us up to speed. By hitting the gas from the onset, it sets us up to make a safe and smart merge. The same holds true in investing. By taking a portion of your cash and investing it immediately you are jump-starting the process of re-investment. While this initial step may be met with hesitation, anxiety, or overwhelm, it is important to get started.



OPPORTUNISTICALLY: As you speed up to cruising speed, you begin looking for clear gaps to merge into. Sometimes they are right there when you need them and sometimes you need to exercise some caution and patience. These same disciplines apply to investing. In strong bull markets, pullbacks tend to be short and shallow, so you have to be ready (and willing) to take advantage of opportunities as they arise.


EVENTUALLY: As the merge lane starts to narrow, you are gradually forced onto the highway. Re-investment windows also must come to an end because staying sidelined in cash for too long can undermine your long-term goals. We often recommend that investors dollar-cost average their way back into the market over a period of months. You may choose whatever rule works for you but just make sure you stick to it! A trusted advisor can help hold you accountable for your plan.


If you follow this decision-making framework, you’re never going to get the best entry, but you’ll also never get the worst entry. Most importantly, you’re going to be back on track towards achieving your long-term goals.


 

Investment and Insurance Products: Not FDIC Insured / No Bank Guarantee / May Lose Value

 

Wells Fargo Advisors did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The report herein is not a complete analysis of every material fact in respect to any company, industry or security. The opinions expressed here reflect the judgment of the author as of the date of the report and are subject to change without notice. Any market prices are only indications of market values and are subject to change. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request. Past performance is no guarantee of future results. Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC, Member SIPC, a registered broker-dealer and non-bank affiliate of Wells Fargo & Company.


 


Rob Edwards

Managing Director – Investments

Senior PIM® Portfolio Manager

Edwards Group of Wells

Fargo Advisors

Komen


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