Wiley, CDs are insured by FDIC. Most banks are now paying over 5%. CDs are certificate of deposit, so they are just bank deposits that you have to commit for a period of time, 3 months to 5 years. I have 3 month CDs.
Dollar cost averaging makes sense, but not if we are buying overpriced stocks. My plan now is to be in cash until the recession gets in full swing, and then to look for signs of an economic recovery. Once wages and consumer spending picks up again, probably in the middle of the recession, is the time I plan to enter the stock market. Of course I could be wrong, and the markets could behave different. However, I am more worried about losing out on a gold or euro rally than I am about losing on long term increases in the stock market.
Most of my investing years, I’ve struggled to make sense of where to put my money. Which asset class will perform better? This is the first time in my life, where I have great clarity about a housing-led recession. I doubt that I will have this much clarity about investing ever again. After 2007, I will be struggling once again, wondering what will happen next.
