It’s time to get back in

Still sitting on a pile of cash? The market awaits.

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by

From the Dec/Jan 2010 issue of the magazine.

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If you pulled out of the stock market last year as the economy imploded, it’s probably time to get back in. You’ve already missed a good part of the rally, but there’s still money to be made as the markets rebound. “It’s horribly expensive to be sitting on sidelines,” says Eric Kirzner, a professor specializing in investment at the University of Toronto. “Things are no longer bargain priced, but they’re still way below the highs from before meltdown.”

But what should you invest in? Kirzner suggests buying several exchange-traded funds (ETFs) to quickly establish a mix of stocks from different regions. He recommends buying an ETF that tracks the S&P/TSX 60 (such as iShares’ XIU), one that tracks markets in Europe, Australasia and the Far East (such as iShares’ XIN) and one that tracks the S&P 500 (such as State Street Global Advisors’ SPY). To round out the mix, put some cash into a money market and bond fund.

If you’re feeling wary about jumping back in, Ted Rechtshaffen, president of TriDelta Financial Partners, suggests buying preferred shares, which tend to be less volatile. When considering market sectors, Rechtshaffen says commodities and financial services tend to do well in early and mid-stage bull markets.

Whatever you decide, Kirzner advises against trying to make up for lost time by being overly aggressive. “Investors have to keep their eye on prize,” he says. “Earning your money back doesn’t have any real meaning. People invest in the market to achieve  a particular goal over many years.”

23 comments on “It’s time to get back in

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