Safe Stocks To Invest In Short Term

Safe Stocks To Invest In Short Term – While we all like the idea of ​​a risk-free stock investment, there is no such thing as a stock that is 100% safe. Even the best companies can face unexpected problems, and it is common for the most stable corporations to experience significant stock price volatility. We saw that in the early days of the COVID-19 pandemic when many strong companies saw their share prices drop dramatically. We also see it in 2023 with the final interest rate, inflation and continued international conflict.

Despite what you may read on social media, there is no such thing as a stock that never goes down. If you want a completely safe investment with no chance of losing money, government bonds or certificates of deposit (CDs) may be your best bet.

Safe Stocks To Invest In Short Term

However, some stocks are significantly safer than others. If a company is in good financial shape, has pricing power over its competitors, and sells products that people buy even during a deep recession, it’s probably a relatively safe investment.

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What safe investments can you make in the stock market? There is no perfect answer to this, but we can identify some great companies with low volatility and high return potential. Here are seven safe long-term stocks that should deliver strong returns over time.

Dividend aristocrats, which are companies that have grown dividends for at least 25 years, are considered safe stocks.

Berkshire Hathaway (BRK.A -1.1%) (BRK.B -0.9%) is a conglomerate that is a collection of about 60 subsidiaries, including auto insurer GEICO, rail transport business BNSF and battery maker Duracell. There are many (like these three) non-cyclical businesses that generally do well in any economic climate.

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Berkshire also owns a large stock portfolio with large positions in large and mature businesses such as Apple (AAPL 0.16%), Bank of America (BAC -1.68%), Coca-Cola (KO -0.85%) and many others. In short, owning Berkshire is like owning several different investments in one stock. Most of the stocks were chosen by CEO Warren Buffett, one of the greatest investors of all time.

Because of the diversified nature of its businesses, Berkshire can be a great choice if you’re looking for a safe entry-level stock. It’s like buying a diversified portfolio in an investment.

Most people know Disney (DIS -0.83%) for its theme parks, movie franchises, and characters, but there is much more to this entertainment giant. Disney also owns a large cruise line. film studios Pixar, Marvel and Lucasfilm; ABC and ESPN television networks; and streaming services Hulu, ESPN+ and Disney+.

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These theme parks have tremendous pricing power and often do well in economic climates. Disney’s movie franchises are among the most valuable in the world, and its streaming business generates a large (and rapidly growing) recurring revenue stream.

Disney was not immune to the COVID-19 pandemic. The company experienced a significant drop in revenue due to the temporary closure of Disney theme parks, Disney Cruise Line and movie theaters.

Despite the challenges, Disney’s business has remained resilient on the strength of its Disney+ streaming business and the company’s renewed focus on its direct-to-consumer strategy. Plus, the surge in demand for Disney’s theme parks since pandemic restrictions were eased shows just how strong a business it is.

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Profitability is a good indicator of a company’s viability. What’s more, dividend-paying stocks tend to be more stable in tough times than non-dividend-paying stocks.

The Vanguard High Dividend Yield ETF (VYM -0.85%) is an exchange-traded fund that invests in a portfolio of stocks that pay above-average dividends. Top stocks include Johnson & Johnson (JNJ -0.1%), JPMorgan Chase (JPM -0.92%), Home Depot (HD -1.3%) and Exxon Mobil (XOM 1.12%), but the fund invests in more than 400 stocks. does

Procter & Gamble (PG -0.83%) makes products that people need in every economic environment. P&G is the parent company behind household product brands such as Pampers, Downey, Tide, Charmaine, Gillette, Old Spice and Fabreez.

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To give you an idea of ​​how stable and consistent Procter & Gamble’s business has been over time, consider that the company has increased its dividend for 66 consecutive years. It is one of the best profitable dates in the entire stock market.

Real estate is an example of an asset that produces the best long-term growth without too much risk. Real estate investment trusts, or REITs, allow investors to gain exposure to a portfolio of commercial properties such as office buildings, shopping centers and apartment buildings.

The Vanguard Real Estate Index Fund (VNQ -2.15%) invests in a variety of real estate stocks, pays an above-average dividend yield, and may be a low-risk but high-potential investment opportunity.

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To be sure, REITs are not immune to short-term volatility, and this is especially true when interest rates rise sharply (like in 2022). But the long-term investment thesis is sound and the safety of real estate remains, especially when you’re investing in a diversified index fund like this one.

You’d be hard-pressed to find a brand with a bigger competitive advantage than Starbucks (SBUX -0.73%) . Its trusted brand gives the company an advantage over competitors, and its large scale gives it operational advantages. Starbucks can charge more money while benefiting from the cost advantages of such a large company.

Starbucks increases its footprint and revenue year after year. It’s hard to imagine a world where Starbucks isn’t the go-to destination for high-quality coffee. Even when the COVID-19 pandemic forced Starbucks to close its indoor seating, customers still flocked to Starbucks lines to grab their favorite drinks.

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Apple (AAPL 0.16%) has the enduring advantage of having an extremely loyal customer base and an ecosystem of products designed to work well with each other. iPhone and Mac users remain iPhone and Mac users.

It’s no secret that Apple products cost more than comparable phones, computers, and tablets — a sign of Apple’s enormous pricing power.

While no stock is perfect, you can certainly build a portfolio of relatively safe stocks if you add some guidelines to your stock analysis.

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Sectors of the Stock Market The large stock market consists of several sectors in which you may want to invest.

If you want to invest in “safe stocks”, the list above will get you started. But before you start, remember two caveats:

First, one of the best ways to make your portfolio safe is to diversify it. As noted earlier, no stock is completely immune to volatility and competition, so by finding relatively safe stocks and spreading your money across a group of them, you’re giving yourself more of a safety net if you Just buy one or two. .

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Second, the stocks mentioned here (and others that look safe) are not necessarily “safe” for the short term. Even the best-run companies experience short-term price fluctuations, and this was particularly evident during the COVID-19 pandemic. Don’t worry about stock prices for days or weeks, but focus on companies that are likely to perform well over the long term. And when it comes to safe, long-term stocks like these, short-term weakness in stock prices can create great buying opportunities.

Basically, the safe stock investment method is to find stable companies, buy a bunch of their stocks, and hold them for a long time.

Bank of America is an advertising partner of The Ascent, a paint company. JPMorgan Chase is an advertising partner of The Ascent, a colorful company. Matthew Frankel, CFP® has held positions at Bank of America, Berkshire Hathaway and Walt Disney. The Motley Fool has positions in Apple, Bank of America, Berkshire Hathaway, Home Depot, JPMorgan Chase, Starbucks, Vanguard Specialized Funds – Vanguard Real Estate ETF, Vanguard Whitehall Funds – Vanguard High Dividend ETF and Walt Disney. Motley recommends Johnson & Johnson and the following options: Walt Disney January 2024 $145 long calls Coca-Cola January 2024 $47.50 long calls April 2023 $100 short calls on Starbucks and $155 January 2024 short calls on Walt Dice. The Motley Fool has a disclosure policy.

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Calculates the average return of all stock recommendations since the launch of the Stock Advisor service in February 2002. Return from 05/25/2023.

Calculated with time-weighted returns since 2002. Volatility profiles based on three-year calculations of the standard deviation of service investment returns.

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