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IN THIS ISSUE: AI update, gas savings, and reducing risk |
GOOD START
How does an extra $4,200 sound? According to the US Census Bureau, that’s the median amount generated each year by households that bring in passive income. Here are 13 ideas if you’re interested. |
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THE HEADLINES
AI watchWhat’s happening: Fidelity pros are watching several AI trends closely for potential market impact.
Tell me more:
For example, the emergence of AI agents—digital AI assistants that can do things for you like booking a trip, buying something online, or even planning an event. This is exciting because it can reduce the need for human involvement, freeing up cognition for other tasks, says Chris Lin, a portfolio manager at Fidelity. Traditional software was written to automate tasks with a human in the loop, but if humans are increasingly removed from the equation, then that could be a potentially disruptive change that could impact software stocks. Fidelity pros are also watching other developments like AI-powered robotics and orbital datacenters in space for their impact on stocks. |
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What it means for you: Even in the face of uncertainty, markets have historically proved remarkably resilient. As new developments unfold, investors should stick with an investing strategy tailored to their own risk tolerance, goals, and timeline. Staying diversified can help too. Here’s what you could include to help build a more resilient portfolio. |
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April fuelsWhat’s happening: Gas prices are up past $4 a gallon. That’s almost a full dollar more a gallon than last month.1 Now, lawmakers and government agencies are making moves to help reduce prices amid the conflict in Iran.
Tell me more: The US government has ramped up oil production off California’s coast and lifted sanctions on some foreign oil sellers to increase supply. Meanwhile, state lawmakers have suggested gas tax holidays. Georgia’s is happening; TBD if others will come to pass. The Environmental Protection Agency has also approved selling cheaper, higher-ethanol gas starting in May. It’s typically off-limits during warmer months due to smog.
These changes could have marginal benefits, but substantially bringing down gas prices will likely come down to reopening the Strait of Hormuz. Before it was mostly closed off, 20% of the world’s oil was transported through it.2
What it means for you: Besides higher prices at the pump? Soaring shipping costs mean price hikes on food and even USPS mail. Analysts say these increases could offset the larger tax refunds Americans received due to recent tax law changes. If you’re feeling squeezed, here are 10 ways you could save on gas right now.
A potential upside for investors: Energy stocks have risen 32% this year compared with a nearly 4% decline of the S&P 500 Index,3 as of April 2. Learn more about why Fidelity pros think energy stocks are just getting started. |
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Yield signsWhat’s happening: Recent volatility and current interest rates mean it may still be a good time to lock in a solid rate of return with a certificate of deposit (CD).
Here’s why: While CD yields are down after peaking in late 2023, today’s best CD rates outpace the current rate of inflation. Investors can find CDs and credit unions’ similar offerings paying over 4% in annual percentage yields.
What it means: CDs and share certificates are lower-risk investments to consider if you have extra cash in a low-interest account. Fidelity offers
brokered credit union share certificates
and brokered CDs—so-called because Fidelity is a brokerage offering multiple banks’ CDs and credit unions’ share certificates. Another potential higher-rate alternative to cash holdings: a CD ladder, which is a group of CDs with various maturity dates. Check out
model CD ladders. |
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HOW TO
Help prevent your portfolio from underperformingWhen markets are up and down, these drags on performance can be easy to miss. |
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QUICK Q
How can I reduce risk with my investments?An investment strategy that allows you to stay the course, despite downturns, is often the best approach. Frequent changes to your plan, such as going back and forth between aggressive and more conservative investing, could make it harder to hit your goals. It’s too easy to buy and sell at the wrong time.
That said, your time horizon, financial situation, or risk tolerance can change. If that's happened, you might consider tweaking your assets to help ensure that your portfolio is not overly dependent in one area. If you feel your asset allocation is right but are still thinking about risk, Kenny Davin, a Fidelity vice president and branch leader, suggests these 3 options.
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Reduce risk by incorporating investments that offer fixed rates, like CDs, Treasurys, and fixed deferred annuities. These options prioritize the principal of your investments rather than seeking high returns and offer a lower potential rate in exchange for stability.
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Manage risk by considering defensive investments, like higher-quality bonds or conservative, well-established stocks that have historically offered steady returns. (Reminder: Past performance doesn’t guarantee future returns.) They will likely still experience ups and downs, but they could potentially offer a smoother ride.
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Transfer risk with certain types of annuities backed by insurance companies. The insurance company assumes the risk for your investments—providing downside protection in exchange for some of the upside.
Learn more about how much risk you are willing and able to take on and get more strategies to help reduce it. |
