Is Now a Good Time to Invest in the Stock Market?
Updated: Aug 24, 2020
Is now a good time to invest? Yes. Why? Because it’s a day that ends in ‘Y’. There you have it. No beating around the bush.
Ok, you really want to know why? Today is a good day to invest in the stock market, because every day is a good day to invest in the stock market! Why is every day a good day to invest? Because regardless of the state of the market, there is an advantage to the investor.
The stock market is up? Great! You can feel good knowing you’ll have an immediate (though, unrealized) return on your money. The stock market is down? Great, you’re getting a deal on those stocks compared to a few days, weeks, months… ago.
For new investors, it can be intimidating or scary to invest in a volatile market. One day it’s up, the next day it’s down. You’re never quite sure if “today is the day to buy”. Well let me reassure you. If you have the money to invest (i.e. stable income, minimal debt, and a fully funded emergency fund) and it was part of your original long-term investment plan (i.e. monthly or other reoccurring contributions), then yes, today is the day to buy. Contribute to that IRA. Buy up that index fund. Maybe throw a few bonds in there for fun (and risk aversion).
Making regular contributions to your investment accounts, regardless of the state of the market, is the way to make your accounts grow and reap the best of both worlds: immediate returns on up days and discounted stocks on down days. Timing the market is impossible and can cause you to miss the days where millionaires are made!
While the market falls harder than it gains (unfortunately, much like a credit score), it falls less frequently, which means that you have more of a chance of buying on an up day than you do a down day. Also know that if you are investing in a broad market index fund such as an S&P 500 or Total Stock Market index fund, you are investing in the top performing companies in the entire country. All those companies you know and love (or hate): Amazon, Netflix, Google, Target, fast food chains, grocery stores, and so much more, are what you own. And all of those companies would have to cease to exist for the markets to truly “bottom out”.
Really, the only way to lose money in a volatile market is to sell, but that’s a blog post for another day. Today? Today is the day to buy – and feel good doing so.
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