Market situations change depending on various factors. That’s something you need to be prepared for in online stock trading. It also comes with experience.
Why Are Volatility Fears High?
There are fears of volatility in the stock market. Could such an unstable situation arise? It has been seven consecutive months where gains have been reported. Equities have also attained fresh highs. All this while, cases of the Delta variant of Covid-19 is rising. That’s why fears of the market potentially going down after this continuous rise is in the minds of investors.
In this situation, utilities have performed the best within the S&P 500 in the current quarter, gaining 10.2%. This has been followed by the real estate sector and healthcare industry, respectively.
Looking at the derivatives markets, the gap between the VIX index and the CBOE Volatility Index has been higher than how it has been for the most part of the previous five years, Yahoo Finance reports. This is an indication that investors are fearful of the current calm period in the stock market giving way to stronger price swings.
What Investing Options to Choose?
Even if you fear volatility, there haven’t been alternate options to equities, with fixed income providing quite low yields.
So, if volatility is what you’re worried about, you can look at dividend stocks from sectors such as utility and real estate. Dividend stocks not only provide you with a fixed income, but they also give you long-term growth prospects - much needed stability in an unpredictable situation.
Why Utilities and Real Estate?
The thing about utilities is that they deal with essential infrastructure that keeps cities, houses, and factories running. These stocks may fall, but they tend to stand strong in adversity since the demand for their services never runs out. Companies that supply electricity and resources such as natural gas to customers spread out in various states will always be running. We all know that electricity will always be in demand. If customers and states are concerned about the way electricity is generated, there are companies that go for environment-friendly means of electricity generation and have set targets for 2030.
Real estate investment trusts (REITs) focused on property buying and leasing to government agencies are also unlikely to significantly lose demand for their services. They have the backing of the government and are not dependent on the budget, needs, and whims of private entities. The advantage of REITs is that they need to return nearly all their taxable income as dividends to shareholders.
Volatility need not be the end of the world. Even if you fear such episodes in the stock market, there are long-term investment options for you that can keep you unharmed during uncertain times. Make use of our zero commission trading too to maximize your earnings. Happy trading!
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