During a stock-market selloff, how would you invest $100,000?

After a wild Wednesday on Wall Street, investors are nervous.

What should you do with money sitting in your bank account? Take a theoretical $100,000. How should you invest it now? “Review your portfolio to see if there are any of your assets that you should now buy more of at lower prices,” said Tim Courtney, chief investment officer of Exencial Wealth Advisors in Oklahoma City. Don’t react or act without a plan. “You should not change your current investment strategy if it was well thought out to begin with.”

The Dow Jones Industrial Average DJIA, -2.13% plunged 831 points Wednesday in the worst day since the market correction last February. The market struggled to maintain positive ground Thursday. Many people are understandably concerned about what this means for their 401(k) accounts, but for those who have saved money as the economy has grown over the last nine years and are keen to invest their cash, it’s a particularly troubling time.

Word of warning: Do not sell into a market pullback, says Greg McBride, chief financial analyst at personal-finance site Bankrate.com. “When the market pulls back sharply, it creates a buying opportunity that didn’t previously exist. Valuations become more appealing and it gives you the chance to scoop up, or add to, positions you’ve wanted to accumulate but thought the price was too high. The time to buy is when the market is on sale, not when it’s selling at full price.”

“If the bulk of your wealth is tied up in home equity, then investing in the stock market for long-term needs and cash or high quality bonds for short-term needs is entirely appropriate,” he adds. If you don’t have an adequate emergency fund to cover six months’ worth of expenses, build that before you do anything. “Don’t let short bouts of market volatility distract you from the pursuit of your financial goals,” he says. “Volatility is normal.”

The reason for the volatility has been attributed to a series of events, including a rapidly rising interest-rate environment, the corporate buyback blackout period heading into third quarter earnings, selling pressure from risk-parity funds and the deterioration of technical factors, trade concerns due to the tariff war with China and uncertainty surrounding the mid-term elections.

“The recent volatility might be the result of all of these, a combination of these, or none of these,” says Marc Dizard, investment regional manager, west region at PNC Wealth Management in Cincinnati, Ohio. It’s difficult to pinpoint, but he says. “Volatility in equity markets doesn’t really disappear, it more or less goes in and out of hiding.”

Moves of 1% up or down or not unusual in relatively quiet periods, Dizard says. What not to do is just as important as what you should do, he adds, especially if you have a six-figure sum lying around that you were keen to invest. “Do not run to put all of your cash into your favorite stock,” he says. “Do not look at this cash in isolation outside of the perspective of your entire asset base.”

Dizard says relative to bonds, equities still look attractive, but says you should ask, “What are the objectives you are solving for with your entire portfolio? Ideally, this work would have already been accomplished prior to this week’s volatility but, if not, this is a great opportunity to gain that perspective, which is likely to help with decisions like this in the future.”

MarketWatch asked a range of experts how they would invest $100,000. Here’s what they said:

Seek out ‘higher quality’ dividend growth stocks

Eric Ervin, CEO of Blockforce Capital, a financial technology firm in San Diego, Calif., says given the confidence underpinning the bull market over the past eight-plus years, he expects that many investors are currently overweight in equities. As such, he says it’s a “great time” to consider alternative assets and asset classes, diversify your portfolio and reduce some exposure to equities and fixed income bucket.

Dividend growing stocks typically outperform all other categories, he says. “With price-earning ratios at historically high levels, and given the rising rate environment we’re currently in, it’s important for investors to seek out the higher-quality equity names with the best potential to continue growing their dividends,” Ervin adds, citing Divcon, Blockforce’s dividend-health rating system.

Play it safe and hold your money in cash (for now)

If and when the market undergoes a correction — which would represent a 10% decline from the Dow’s all-time high of 26,828 on Oct. 3 — Morey Stettner, a consultant, contributor to MarketWatch and author of “Skills for New Managers,” said he would invest 25% of that theoretical $100,000 in an exchange-traded fund that tracks the total market, the S&P 500 or some other diversified index — perhaps a Vanguard Total Stock Market ETF VTI, -2.13%

“I’d invest $100,000 by holding it in cash for now, such as Vanguard Federal Money Market Fund VMFXX, +0.00% which currently pays 2.03%,” he says. “With each successive 10% drop, I’d invest another 25% in the same way.” That fund invests in U.S. government securities “and seeks to provide current income and preserve shareholders’ principal investment by maintaining a share price of $1.” In other words, it’s a very conservative option.

Consider diversifying in high-quality short-term bonds

As always, make sure you have the stomach for stock-market fluctuations. “For an investment of $100,000, I would recommend the same well diversified mix of stocks and bonds across global regions and market capitalization based on a risk tolerance matched to the individual,” says Lorraine Ell, chief executive and senior financial adviser of Better Money Decisions, a financial advisory firm near Albuquerque. “This is a great time to invest.”

“Since the bond market has been more volatile than normal, make sure you are in high-quality short term bonds to counterbalance the dramatic shift in the stock market,” she says. “If you are panicking, then your risk tolerance may not be as high as you thought and this is a good time to reassess the allocation of stocks and bonds in your portfolio from an emotional perspective.” Check the expense ratios in your funds and ETFs. “High fees are a drag on performance.”

Invest your $100,000 as if Wednesday never happened

Kyle Woodley, senior investing editor at Kiplinger.com, said he would make the same decisions as he would have 48 hours ago. “Bonds are delivering almost a percentage point more income than they were a year ago, but I’m 36, I’m almost entirely in stocks, and the returns on bonds still don’t justify any shift to me. However, bonds are becoming much more enticing to any retirees who are currently shifting from wealth accumulation to wealth preservation.”

Fundamentally, not a lot has changed if you look at the Dow’s performance over the last five years. “Treasury rates are pressuring stocks some, and Barclays’ outlook on internet stocks certainly gave investors a little more pause,” he says. “But otherwise, fundamentals look great: strong economy, decades-low unemployment, lavish earnings expectations, favorable tax rate, good sentiment.” Brace yourself for more volatility, he adds.

Invest most of your spare cash in the stock market

“Assuming I had no particular needs for cash flow and no goals other than maximizing a return, I would invest a minimum of $50,000 and up to $80,000 into stocks with an emphasis on assets that are trading less expensively such as U.S. value stocks and international stocks,” Courtney said. “I would keep about $20,000 in cash and short-term bonds paying about 2.5% and use these assets to buy more stocks should we experience a meaningful market pullback.”

And what would he do with the rest of that $100,000? He would look beyond equities and bonds. “That would go to buy other assets to diversify my portfolio such as real estate, MLPs, etc.,” he says. MLPS exchange-traded funds or master limited partnerships are traded on securities markets like normal stocks. Bottom line: “We always want to take into account goals and cash flows before investing,” Courtney adds.

Look into gold, real estate and other commodities

Will Rhind, the founder and chief executive officer of GraniteShares, an independent ETF issuer headquartered in New York, says real assets, like commodities — including gold, which are set for a third straight rise Thursday — and real estate, may do well in a rising interest rate environment. “Rates typically rise in the later stages of the economic cycle as monetary policy is tightened to prevent an overheating/high-inflation economy.”

Word of caution: A rising interest rate environment obviously means higher mortgage repayments. The 30-year fixed-rate mortgage averaged 4.90% in the week of Oct. 11, up from 4.71% the previous week, according to mortgage liquidity provider Freddie Mac. Many investors found more solace in the fixed-income markets after Wednesday’s sell-off, but the Dow has outperformed gold fourfold over the last 30 years.

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