As September approaches, investors may be wondering where they can put money to protect against market volatility. The S&P 500 is still in a bear market, down more than 17% from its all-time high in January. Since the beginning of the year, the index has lost more than 16%. “You needed a lot of shelter [this year] and the ones you would traditionally pick haven’t worked,” said Mark Hackett, head of investment research at Nationwide Financial, noting the performance of bonds and gold, often seen as a hedge against inflation, since the beginning of the year. Money managers and strategists recommend bringing cash on the margins to the market instead of letting it sit. Although markets have been choppy this year, inflation is still near a 40-year high – l The consumer price index measured 8.5% on the year to July – meaning cash on the fringe is rapidly losing purchasing power. “The benefit of investing in cash this year is that it held its value better [than other investments,]“, said Collin Martin, director and fixed income strategist at the Schwab Center for Financial Research. On the other hand, high inflation quickly erodes that value, and uninvested cash has no potential for growth. breakdown of alternatives for storing cash outside your three to six month emergency fund and what the financial experts think Money Market Funds Money market funds are generally considered safe investments because they have low volatility and offer more liquidity than CDs – you can withdraw cash at any point without penalty They are not as safe as cash, but much less risky than investing in stocks. A fund such as the Vanguard Federal Money Market fund is earning 2.14% today and since its inception in 1981 it has averaged 3.89% per year Since 1926, Vanguard claims that stocks have returned 1 0.3% per year, while bonds offered an average annual total return of 5.3%. Still, money market funds can be a good place to park some cash and bide your time while conditions improve. ettle and other allowances are weighed. “Very short instruments like CDs or money markets make sense, especially for investors who want to average the dollar cost or use market pullbacks opportunistically,” said Anthony Saglimbene, chief strategist of the market at Ameriprise. CDs CDs are also conservative investments and insured by the Federal Deposit Insurance Corp. up to $250,000 per owner, making it a good choice for people looking to protect their capital on money they don’t need immediate access to. For a five-year CD, an investor could get an interest rate of 3.75%, according to Bankrate. For a one-year version, the interest rate is 2.7%. If you’re considering a CD, it makes sense to opt for a shorter term, according to Daniel Milan, managing partner of Cornerstone Financial in Southfield, Michigan. “If you’re dating until five, you don’t value your investment enough,” he said, adding that it’s kind of like kicking the box because you hold your money until the CD matures. . “In the current environment, short-term Treasuries look more attractive and provide more liquidity,” Martin said. Bonds Bonds, and more specifically US government bonds, are one of the best safe havens for investors. “We don’t think the role of bonds in an investor’s portfolio has necessarily changed,” Martin said. “We still see a lot of value there.” He added that this year bonds have not been the place to hide as they usually are when stocks are falling – bonds have also fallen since the start of the year. Globally, they are approaching a bear market, like stocks. Still, the worst is probably over, he said. “Our main direction right now — and this may be a tough pill for a lot of investors to swallow — is that investors are looking at moving away from the yield curve a bit,” he said. “If you go for a five- or ten-year Treasury note, you’re accepting a lower yield than what a two-year Treasury note offers,” he explained. “And that’s a tough pill to swallow, but we prefer to lock in that return with certainty.” If the economic outlook continues to deteriorate, the Fed could pivot and cut rates, pushing bond prices higher as yields fall (bond price and yield move in opposite directions to each other) . if their yields start to fall, they will see the greatest price appreciation,” he said. There are also opportunities in other parts of the bond market, in assets such as Treasury Inflation-Protected Securities, or TIPS, and I bonds, which are indexed to inflation. Series I savings bonds — which currently pay an annual rate of 9.62% through October — can be a great addition to your portfolio if you plan to hold them to maturity, Milan said. Just note that the annual contribution limit is capped at $10,000 per person. Gold Gold has traditionally been considered a safe haven asset and has historically been used to protect against high inflation. That hasn’t been the case this time around – year-to-date it’s lost more than 4%. “This is the exact time gold should work, which is high inflation, concerns about the global economy and [investors] need a parking spot,” Hackett said. “But that didn’t work out this year either. Additionally, there may be issues in terms of storage – if you buy the physical bullion – and liquidity. retired or close to retirement can earn income and protect their investments from market volatility. This year, annuity sales hit a record high in the second quarter. “The three-year is at 4.2%, so you get a premium,” Milan said at a fixed annuity. Interest rates on shorter-term annuities are generally higher than those offered by money market accounts or CDs. “It’s quite an attractive option in this market,” Milan said. offsetting portfolio losses may not want to move away from equities, according to Hackett. margin pressures, sa id Hackett, adding that companies with dividends are a good place to start because they have generally proven to have strong cash flow. Still, he cautioned that investors need to understand that this year even the most traditional safe havens simply haven’t done very well, so a little patience and a long-term view is needed. “Unfortunately, there’s no silver bullet here,” Hackett said.