Let me guess…
Right now, you're thinking this investing game is NO FUN at all.
Watching your portfolio tank, day after day…
Looking at your wealth shrink, bit by bit…
Wondering when it will all end, how it will all end, if it will all end, and whether you'll still have enough money left to live the comfortable retirement you deserve.
It's treacherous out there, for sure.
The big four banks are in a bear market. The big miners are being slammed, and with BHP Billiton Limited's (ASX: BHP) shares plunging another 7.5% overnight in New York, today is another messy day for shareholders in the Big Australian.
Even Woolworths Limited (ASX: WOW) shares — once considered a safe-haven — are trading at close to a 52-week low, and at levels seen way back in 2008.
So what do you do?
The first step is simple.
Don't sell a thing.
Next, at times like these, don't even attempt to look at your portfolio. Doing so only heightens the chances of you doing something irrational, something you'll regret once markets inevitably stabilise.
Remain calm.
These times will pass. Mark my words.
And here's some good news…
The S&P/ASX 200 Index is already down almost 17% from its April peak. History suggests we're close to the bottom.
Given that, wouldn't you rather be buying shares than selling?
Wouldn't you rather be putting spare cash to work in the market NOW, than leaving it sitting in the bank earning a pittance?
Last week, in the face of this share market volatility, I instructed by bank to immediately transfer money OUT of my savings account and INTO my brokerage account.
At the time, like now, I wasn't to know how long this volatility would last. But one thing is for sure — I'm NOT about to miss the opportunity to BUY shares when they are trading at these dirt cheap prices.
That said, I'm not about to go "all in" on the stock market now. This volatility might hang around a little longer and I want to keep some dry powder in case markets fall even lower.
Many years of experience has taught me you can never buy at exactly the bottom of the market.
The same experience has also taught me your best course of action at times like these is to regularly add money to the market.
Whether that's weekly or monthly, especially given history suggests the ASX is already close to the bottom of this correction, it's a tactic that's served me well over the years, and will very likely serve you and your SMSF VERY well too.
So… what to buy?
One company on my radar is Insurance Australia Group Ltd (ASX: IAG).
Warren Buffett recently sank $500 million into IAG, seeking to benefit from its share of the growing Asian insurance market.
That was less than three months ago. Today, IAG's shares trade at close to $5.00, a near 18% fall since Buffett's stake was announced.
At $5.00, IAG shares trade on a forward P/E of less than 13, and a trailing fully franked dividend yield of 5.8%, which grosses up to 8.3% once franking credits are taken into account.
Sure beats leaving your money in the bank… plus a stake in IAG allows you to invest alongside one of the world's richest and greatest ever investors.
I haven't pulled the trigger on IAG… yet, anyway.
And now I've publicly written about the company here today, The Motley Fool's strict ethical trading rules now preclude me from buying IAG for at least two full trading days.
It's a small price for me to pay to ensure The Motley Fool puts YOU first… always giving you the opportunity to buy before us, at what could be the best prices on offer.
In any case, I'm not overly bothered if I pay $4.90 or $5.10 for a stake in IAG. In the fullness of time — and I'm talking about holding a stock for a minimum of three years, ideally longer — if everything goes to plan, a few cents here or there today will be totally immaterial to the gains you could make over the long-term.
Another company on my radar is the stock Scott Phillips has recently named as his top stock to buy now, exclusively revealed to Motley Fool Share Advisor subscribers.
Out of respect to our paying members, I can't tell you the name of the stock. But what I can do is tell you is this…
- I already own the stock, having bought it some time ago after Scott first recommended the company to members of Motley Fool Share Advisor.
- I'm seriously considering topping up on my already large holding, given how dirt cheap the stock has become (its forward P/E is just 12 times earnings — a bargain in anyone's language).
- The company recently reported record results, with net profit after tax jumping 20% (remember, this growth stock trades on a forward P/E of just 12!)
- It recently raised its fully franked final dividend by 15%, and now trades on a forecast fully franked dividend yield of 4.3%, which grosses up to over 6%. (The shares are soon to trade ex-dividend… meaning if you bought them today, you'd receive the fully franked final dividend next month.)
- This was Scott's first ever triple recommendation of the same stock. Of ALL the companies trading on the ASX, of ALL the companies that recently reported results, of ALL the companies that have seen their share price whacked over the past few weeks, THIS is the one Scott recommends Motley Fool Share Advisor members buy now.
And here's the kicker. Courtesy of the recent share market volatility, you can buy the shares at a cheaper price than when Scott recently recommended Motley Fool Share Advisor members buy the stock.
This is truly an "under the radar" ASX stock that has outsized growth prospects, pays a juicy fully franked dividend, AND is trading at a dirt cheap price.
As I said above, at times like these, I'm regularly adding new money to the market. And given the characteristics listed above of Scott Phillips' brand new "triple recommendation" ASX stock, I'd be hard pressed to think of a better company to add to your portfolio today.
