Now is the time to buy not sell


Inflation, record gas prices, record food prices, falling markets, and political turmoil. In the short term this all looks bad. But what is your reason for investing? Are you investing for the quick buck? If so, you’ll be tearing your hair out as you watch thousands, perhaps tens or hundreds of thousands, evaporate from your portfolio. But, if you’re investing for the long haul then this recent drop is actually a buying opportunity.

Think about this from a dollar cost averaging point of view. That solid company that has the ability to ride out temporary storms like these while continuing to pay their shareholders is now at a more affordable price. In addition the drop in stock price increases the company’s dividend yield.

For example, I have three different portfolios. My Low Yield Portfolio was designed to target a dividend yield of about 3%. Today the yield is 3.5%. My Medium Yield Portfolio was designed to target a dividend yield of about 5%. Today the yield is 6.21%. My High Yield Portfolio was designed to target a dividend yield of about 8%. Today the yield is 9.3%.

Obviously I’m not saying the companies where I’m invested will never cut their dividend. This is possible during these times and generally the higher the yield the more risk there is of a dividend cut. Having three different portfolios is my way of trying to mitigate damage that could be caused by one suddenly not paying out as expected.

If you have cash to put into your portfolio it could pay even bigger dividends in the future. At the very least it is not the time to sell. Most likely you’d be selling at a loss. Unless you’re in need of cash for an emergency it’s time to remain calm and remember your end goal. Mine is a portfolio that will produce consistent income over the rest of my life.