The stock market has been up and down like a yo-yo over the past month. During May, investors like myself had to contend with another high inflation shock, more bad news about high energy prices and the continuation of the war in Ukraine. However, good employment data (the lowest for several decades) and some upbeat Q1 earnings from FTSE 100 companies helped to counterbalance this. So as I head into June, here’s how I’d go about investing £1,000.
Talking strategy and buying
The first thing I’d do is actually break my £1,000 into four chunks of £250 and invest each week during June. If the volatility remains the same as May then I feel that splitting up my money will help me out. If one week the mood in the stock market is sour, I’ll be able to buy at cheaper levels than might be seen later in the month.
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Another technical point I’d note for buying is that I’ll leave orders to automatically execute at predetermined prices. This again plays on the volatility element. When I’m happy with the list of stocks I want to buy for the particular week, I’ll place orders for that time period. Then if the share price hits that level, my system will automatically buy me the amount of shares I want. The advantage here is that I should be able to buy at a lower price than on offer currently. The disadvantage is that it might not hit that price during the week.
Outlining the stocks I want
For June, most of my money will go towards dividend shares in the stock market. I continue to be of the opinion that inflation here in the UK isn’t going to fall until at least the autumn. Therefore, I want to make use of high-dividend-yield stocks that can help me to offset the erosion of my cash balances. Obviously, income from dividend stocks isn’t a foolproof way to offset an ever changing inflation figure, but it does help.
Examples that I like at the moment are M&G, Rio Tinto and Persimmon, all with current yields in excess of 8%. In fact, if I buy shares in each company, my blended yield would be almost 10%. I’d look to do this not only for the yield, but also to diversify the stocks that I hold. That way, even if one of the companies decides to cut its dividend per share, I still have income coming in from elsewhere.
Aside from dividend payers, I think that June is a good time for me to buy clean energy stocks. I recently wrote about ITM Power and Greencoat Renewables and why I think they could perform well this summer and beyond.
Navigating the stock market successfully
I think that now is a good time to invest in the stock market, despite the uncertainty. To navigate the market successfully in the long term, I have to be invested during both the good and bad times. So even if the market falls in June, I can use this to my advantage with my £1,000 to buy quality stocks at a lower price.