Where to park your money now?

Everyone knows that the stock market is extremely volatile at the moment and this may continue for a while. I still believe the current correction is not done yet and more downside is still ahead of us. In this situation, the market is controlled by extreme emotional swings more than anything else. It is definitely not a market for most investors and traders I suppose. Yes, it is a traders market but even for experienced traders, it is not as easy as at usual times. There are simply too many "emotional black swans" that can easily derail any technical trending. So for most people, holding cash is a better option until the market starts to stabilize. The million dollar question is where to park your money safely now?

Well, simply keeping cash is definitely the safest option that no one else can beat it. But of course you are virtually paid for nothing. If you can tolerate a little bit risk, preferred stocks (PS) may be a good alternative for you. If you are not familiar with PS, see my previous blog about its concept. While you can pick individual PS if you are savvy about it, there is an easy way to buy an ETF, PFF (iShares US Preferred Stock), which has done the ground work for you with a group of PS shares. As you can see below, PFF (blue) is quite stable compared with S&P index (red), especially during market turmoils like the mini-crash we saw recently. The purpose to buy PFF is of course not for capital gain (similar to if you are saving your money in the bank) but rather to earn its nice dividends (6%) while still keeping your money relatively safe regardless how the market goes. Now is a good time to buy some preferred stocks as part of your cash management, I think.