The 3 Best Safe Investments For Uncertain Times

the best safe investments

Preferred stocks, consumer staples, and utilities are the best safe investments when the market is looking rocky.

Whenever the market is uncertain, I hear from a lot of investors who want to know how to dampen the big swings’ impact on their portfolios, or who want to move some of their money for the best safe investments.

Luckily, plenty of stocks and other investments resist or even move counter to the markets’ swings, and adding some of these to your portfolio can make checking your performance feel less like being on a rollercoaster and more like driving across Kansas.

Here are my three best safe investments for these uncertain times.

Best Safe Investment #1: Preferred Stocks

Preferred stocks are one of the best safe investments. They are a great way to add regular income and counter-cyclicality to your portfolio. For example, let’s talk about PGX, the PowerShares Preferred ETF. It’s an exchange-traded fund that holds preferred shares. That means it buys and holds preferred stock issued by all sorts of companies, although the most common issuers are financial companies.

Preferred stock is similar to a bond but it’s neither a bond nor common stock. It’s a different kind of debt that some companies choose to issue.

Preferred shares represent debt, like a bond or loan. They do not represent or confer ownership, and so the shares won’t appreciate in value like equity. (They’re usually issued at a par value of $25 and trade between $24 and $26. If you buy preferred shares at a discount to par — below $25 — you may see some capital appreciation, but it’s pretty limited.)

Also, the distributions are fixed, like interest on a bond. So you’d only buy a preferred or a preferred ETF like PGX for steady income, not dividend growth.

So owning PGX is more like owning a bond fund than a financial sector ETF. However, PGX is less sensitive to interest rate changes than a bond fund, which is why I like it.

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Alpha Stockman 1 year ago Member's comment

Good read.

Kurt Benson 1 year ago Member's comment

@[PreferredStockTrader](user:62092), do you agree that preferred stocks are now the way to go?

Edward Simon 1 year ago Member's comment

Hi Tom,

Some utilities have not done well as of late, PG&E is one that comes to mind (though ironically might be a good time to pick some up) are there any particular utilities you like right now?