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Hawaii Community College: Stocks, Bonds, and Investing: Oh, My! - Prod

Please upgrade your browser to improve your experience. Financial situations and goals differ, so working with a professional financial advisor may offer the best way to approach investments. The ideas presented here should be discussed with an advisor to determine how they may work within your financial plan.

Many advisors advocate a long-term approach to meeting financial goals. This includes avoiding attempts to make money over the short term and keeping to a disciplined approach that involves regularly salting away money in workplace retirement plans, Ikehara says. Like many other advisors, she recommends a diversified mix of investments that are appropriate for your risk tolerance, financial objectives and time horizons.

Several financial planners we interviewed noted the pace of the economic recovery is a factor in their recommendations.

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Wong says earnings yields from stocks are currently much higher than yields on U. Treasuries, making stocks more favorable.

Among these, Wong likes large-cap companies that are globally oriented because they generally have more exposure to growing international economies, have better access to credit and tend to pay higher dividends. Investors who demand fixed-income, tax-sensitive investments should consider the municipal-bond market.

The default risk is low and the after-tax yields can be attractive for high-quality general obligation and essential-revenue bonds, Wong says. At Morgan Stanley Smith Barney, senior vice president Leslie Hidaka sees as another year of uncertainty and volatility. For this reason, Hidaka suggests a flexible investment strategy centered around three themes. First, he recommends a tactical approach to asset allocation that allows shifting of various asset classes to take advantage of opportunities in fast-growing markets.

Second, people should look for vehicles that can invest in both U. Lastly, he says, people should protect themselves against the downside with investments that can move into cash and gold, and sell short and hedge against certain risks in difficult market environments.

Right now, the cheapest — and, therefore, the most attractive — asset type to us is a select group of world-class companies with lots of earnings and free-cash-flow power. Rose hunts for stocks with modest to low price-to-earnings ratios and high free-cash-flow yields. Hundreds of billions of dollars have been parked in cash or bonds that yield little to no interest.

Cadinha also holds some precious metals as a hedge against government financial mismanagement. Emerging-market currencies should also do well vs. One last word of advice: These recommendations were given in mid-December against a backdrop of sluggish economic growth and worries about Afghanistan and North Korea.

Investment suggestions change as time passes.

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