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Blue chip stocks, which are issued by household name companies with established reputations, are an essential part of a buy-and-hold strategy, thanks to their reliable dividends. This week, blue chip stocks Nestlé and Kraft Heinz dipped following controversy and a company split, respectively.
While a stock may temporarily be down, thanks in part to the constant news cycle, robo-advisors can help you earn steadily on your investment over time, even with a few hiccups along the way.
Ketchup or…Bad Blood?
Kraft Heinz announced on Tuesday it will split into two companies after a decade-long merger, with one focused on groceries and the other on sauces, spreads and seasonings.
The board approved the tax-free spinoff unanimously “to accelerate profitable growth and unlock shareholder value.”
One of the two companies will include the three brands Heinz, Philadelphia, and Kraft Mac & Cheese, with approximately 75% of its sales coming from sauces and spreads. The other will include brands Oscar Mayer, Kraft Singles and Lunchables, with a focus on groceries. The names of the two companies will be determined later.
Kraft shares dropped 7.4% following the announcement, hitting their low at 2:30 p.m. ET.
Warren Buffett, who engineered the original merger back in 2015, told CNBC that he was “disappointed” with the split and that he does not believe forming separate companies will fix Kraft Heinz’s problems.
Meanwhile, Nestlé CEO Laurent Freixe, 63, was ousted after a year in the role, after he was revealed to have a romantic relationship with a direct subordinate, which violated the company’s code of conduct. Nestlé’s board announced on Monday that Freixe would be replaced by Nespresso chief Philipp Navratil.
Nestlé stock dipped slightly in the wake of the news and was still on the decline Wednesday afternoon after complaints alleging “favoritism” in the workplace by Freixe.
Investors, Hold On Tight
Market dips are an everyday occurrence, and blue-chip stocks, known for their resilience, can eventually bounce back even after companies get caught up in scandal or bad news. Robo-advisors, many of which come with automatic rebalancing, or the use of algorithms to keep your portfolio on track with your investment strategy, can automatically sell off stocks and bonds should the need arise.
Robo-advisors are a great tool when it comes to risk management, as investors indicate the level of risk they’re comfortable with, and the algorithm automatically adjusts a portfolio according to the indicated comfort level, saving you time and money and easing the stress of market swings.
Our favorite robo-advisors make investing easy at free or low cost:
- Fidelity Go is great for beginners and experts alike, as a customizable service that aims to diversify a portfolio based on the investor’s goals and risk level. Consumers are able to start with as little as $10. Accounts under $25,000 incur no advisory fees, while higher balances are subject to a 0.35% annual fee.
- E*TRADE Core Portfolios combines automated investing with hands-on customer support. With a low $500 minimum and a 0.30% annual advisory fee, investors can personalize their portfolio starting small, while receiving benefits like regular updates on market events and insights, as well as a dedicated support team.
- Charles Schwab Intelligent Portfolios is a great pick for investors on a budget, with no advisory fees and free quarterly portfolio assessments. While there is a minimum requirement of $5,000, the service includes access to over 80 different portfolio variations and low-cost ETFs touted by in-house experts.
Bottom Line
Market swings don’t have to be terrifying. If you’re risk-averse, using a robo-advisor can help you invest safely over the long run, even if you’re staring at red numbers today.