Here’s Every Reason Why You Should Invest Right Now
Blog | June 18th, 2020
You may be watching the market right now and wondering if anything will ever recover. You aren't alone. Many investors chose to bow out of the market after it dipped low, but in reality, they could be missing out on their best gains yet.
The stock market can cause some anxiety, but with the right tools and understanding, you can build long term wealth by investing. And now could be a great time to begin investing (or continue), despite current events and below-average performance. Let's take a look at why you should be investing right now.
You Can't Time The Market
It's impossible for humans or machines to predict all market trends accurately. The stock market works through compounding. Regular contributions accrue over time, providing a reliable wealth-building tool.
As you contribute, you purchase stock at higher and higher prices over the years. If you pull out of the market just because of a downturn, or you don't take advantage of lowered stock prices while you can, you miss your chance.
If this is your first time investing, you can take advantage of lower stock prices to get more shares for your money. If you invest in index or mutual funds, your risk is diversified, giving you more chance to make your money back when the market eventually rebounds.
This is the epitome of “buy low, sell high.” A crisis drives stock prices lower, so while it feels nerve-wracking to invest in a bear market — that's what they call a market in a dip — this is your best chance to start your investing off on a firm footing.
If you've paused your contributions because you're afraid, you could also be missing out on your compounded gains. As long as your finances aren't in a crisis themselves and you can comfortably afford to keep investing, you should do so.
Even with the infamous stock market crash preceding the Great Depression, the market rebounded in the following years. While it was devastating at the time, anytime there's a market crash, the numbers have always returned in later years.
The stock market isn't a place to put your short term savings, but if you look at the long view (minimum ten years), market returns are reliable enough to reassure anyone. And here's the thing — your savings account isn't as safe as you think.
A savings account doesn't grow at the rate of inflation. In five years, your money could be worth less in terms of purchasing power than if you'd invested in the stock market, which typically outpaces inflation. If your short term savings are secure, you'd be in much better shape to continue your investment contributions and see your return bounce back.
It's Okay to Make Mistakes
If you're worried that you'll make a mistake investing, get this straight right away. No one gets investing exactly right. If you're afraid you'll be making a mistake by investing in the market during uncertain times, it's time to reread the first three sections of this article.
Making mistakes is going to happen. You may not see a return on your money for a few years until the crisis sorts itself out. However, because it's impossible to predict the market, getting in now (within your means), sets you up to gain back your investment and more when the market inevitably comes back in a few years.
You don't have to be an expert to begin investing. The best investing strategy is to get in early and stay in for the long term. That's a simple concept to get behind!
Is It The Right Time?
There are all kinds of reasons why it may not be the right time for you to be investing. However, in many cases, fear of failure prevents us from taking advantage of a good situation and reaping the rewards later.
Aren't worried about your job security.
Have your emergency savings in place.
Are contributing to retirement to the fullest.
Have extra income that you can set aside,
You are the perfect candidate to take advantage of the current market and begin investing. Start slowly and be sure to get a picture of your investment comfort — i.e., conservative, moderate, or aggressive strategies — and make yourself the promise that you'll stay the course for at least a decade.
Investing In Uncertain Times
We can't stress enough how valuable time is in the stock market. The best time to invest was yesterday, but the second-best time is right now. If you've got extra income and want to build wealth for your long term future, you can get into the market more cheaply than you could if everything was booming.
Be sure you invest with reputable companies and funds and never sacrifice your life savings to invest in the market all at once. But with an emergency savings cushion and job security, devoting your extra income to investment could bring you great returns in the long run. Now is the time to take action.