It's worth having a handful of steady, low-risk investments to help you ride out any future market volatility, so here are our top picks.
Jan. 23, 2021
As an investor, it's inevitable that there will be good and bad days. Luckily, you can balance out any stock volatility by investing in companies that are a little more steady than others.
That said, some other investors like to take a fully risk-averse approach to investing. Whichever way you feel about risk, here are some great stocks to think about adding to your portfolio.
1. S&P 500 ETF
This exchange-traded fund (ETF) is a solid long-term bet, which has delivered an average annual return of around 9% since 1957. If you invested $10,000 into the S&P 500 (NYSEARCA: VOO) in 2000, sat through the turmoil from the terror attacks in 2001 and the 2008 Financial Crisis, and then sold that investment today, you would have around $35,000. This ETF is a reliable bet with consistent long-term gains -- a great addition to any portfolio.
2. Berkshire Hathaway
Berkshire Hathaway (NYSE: BRK.A) is a holding company with investments guided by the philosophy of industry legend, Warren Buffett. Berkshire Hathaway's investments saw gains of 2,744,062% between 1964 and 2019, compared to the S&P 500's 19,784%. The company has a market cap of around $550 billion, with around $146 billion cash on hand.
43% of Berkshire Hathaway's portfolio is Apple shares, but nonetheless, the company manages a diverse portfolio with positions in beverage companies, payments, banks, pharmaceuticals, energy, and telecommunications. This diversification allows the company to ride out industry declines, for example, if the energy industry declines it won't be catastrophic for your Berkshire Hathaway shares.
3. Amazon
Amazon (NASDAQ: AMZN) is an e-commerce giant that just keeps getting bigger -- its share price grew by almost 75% in 2020 alone, and I'm confident this growth will continue. The company benefits from its e-commerce segment as well as its high-margin cloud business, Amazon Web Services, which brings in around $40 billion in revenue per year.
Amazon has been constantly innovating and branching out to new industries as it spots growth potential. For example, we have seen heavy investment into spaces such as consumer electronics (Alexa, Kindle) and telemedicine (Amazon Care), and in 2017 the company acquired WholeFoods to complement its grocery business. Amazon is always finding new ways to stay on top, and I'm confident it will do so for the next few decades at least, making it a great low-risk, long-term investment.
4. Walt Disney Company
The Walt Disney Company (NYSE: DIS) is one that could be considered slightly risky or volatile within the near future, but long term, it is a relatively low-risk investment. The pandemic has caused a $7.4 billion loss in operating income for Disney, resulting in a Generally Accepted Accounting Principles (GAAP) net loss of $2.83 billion, its first annual loss since 1980. These huge losses are primarily due to the closure of theme parks and experiences.
Disney+, the company's subscription video service, has almost 89 million subscribers just 14 months after its release, and Disney is forecasting between 230 and 260 million subscribers by 2024. Disney plans to invest heavily in the service, dedicating $14 billion to $16 billion each year on new content which will aid customer retention levels. Disney is extremely bullish on streaming services, hoping to follow in the footsteps of Netflix (NASDAQ: NFLX) whilst taking a different niche approach with regard to its viewing audience.
5. Procter & Gamble
Procter & Gamble (NYSE: PG) has seen strong growth over the last year due to the unprecedented increase in demand for its household and cleaning products -- however, though this rise in demand is temporary, I don't see the growth stopping here. Procter & Gamble is a $335 billion company plus a veteran in consumer goods and has built up a stable empire since its inception in 1837 and has served its investors well since its IPO in 1986. I believe it will continue to do so steadily for decades to come.
Procter & Gamble has developed an intense innovation strategy and invested heavily in technology to ensure it doesn't get left behind. It has acquired successful e-commerce consumer goods companies to capture a larger share of the online market. It has a 'start-up studio', where the company meets with problem-solving entrepreneurs in order to consistently meet consumers' modern needs.
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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.
