How Investors Can Find Steady Returns Amid Ongoing Wall Street Volatility This Year

Think of investing like sailing a boat: sometimes the waters are calm, but other times, big waves can rock your boat. Right now, the stock market is tossing and turning, and that makes it extra important to know how to keep your money safe and growing.

Why This Matters for Investors

Market ups and downs can be scary, but they also bring chances to make smart moves. Investors want to protect their money, earn steady returns, and avoid big losses. Understanding what’s happening helps you make better choices for your portfolio, whether you’re saving for something soon or for the long haul.

The Bull Case: Why Some Are Still Optimistic

• Stocks Bounce Back: Even after dropping over 600 points, the Dow Jones turned around and ended up more than 400 points higher. That shows investors still have confidence.
• Strong Company Earnings: Many companies have been making good profits, which can help stock prices go up over time.
• Interest Rates Help: The Federal Reserve recently cut interest rates and may do it again. Lower rates can help the economy and keep borrowing costs down.
• Cash Piles: S&P 500 companies are holding about $2 trillion in cash, giving them a safety net. Source.

The Bear Case: Why Others Are Cautious

• Trade Tensions: Worries about U.S.-China trade can shake the market and make investors nervous.
• Volatility Is Up: The Cboe Volatility Index (the “fear gauge”) hit a four-month high, showing more people are worried about sudden market swings.
• Economic Uncertainty: Concerns about the economy, interest rates, and possible government shutdowns can make it harder to plan.
• Tight Credit Spreads: Investment-grade corporate bonds aren’t offering much extra return for their risk right now.

Safe Ways to Earn Income in Rocky Markets

When the market gets bumpy, many investors look for safe places to park their money. Here are some ideas:

• Short-Term Cash: For money you’ll need soon, stick with money market funds, certificates of deposit (CDs), or Treasury bills. These protect your savings, even though the returns are smaller.
• CD Laddering: If you use CDs, try buying some that mature at different times. That way, you get steady income and don’t face penalties if you need cash early.
• High-Quality Bonds: Bonds from strong companies or the government can offer steady income. Agency mortgage-backed securities, like those from Fannie Mae or Freddie Mac, are especially attractive now, yielding around 5.15%.
• Municipal Bonds: These are popular with wealthy investors because the interest is usually tax-free. Right now, tax-equivalent yields are especially good for those in higher tax brackets. Learn more.

Looking Abroad for Opportunities

Some experts see good chances to earn income outside the U.S., especially in Europe and some emerging markets, thanks to a weaker dollar and growing choices in foreign bonds.

Don’t Forget About Stocks

It’s tempting to run away from stocks when things get rough, but history shows stocks help your money grow over the long term and can beat inflation. Even if you need to be careful now, keeping some money in high-quality stocks makes sense for long-term goals.

• Mix It Up: Using a “bucket” approach—keeping some money in cash, some in bonds, and some in stocks—can help you manage risk and still earn returns.
• Stay Invested: Trying to time the market rarely works. Staying invested, especially in large and mid-sized companies, has paid off over time.

Investor Takeaway

• Don’t panic when the market gets rough—review your plan and stick to your goals.
• Keep cash for short-term needs in safe places like money market funds or CDs.
• Consider high-quality bonds and municipal bonds for steady income, especially if you’re in a high tax bracket.
• Stay invested in stocks for long-term growth, but focus on strong, reliable companies.
• Diversify across different asset types and markets to smooth out the bumps and seize new opportunities.

For the full original report, see CNBC