With everybody’s concerns about the economy right now, it’s easy to feel suckered into the notion of doom and gloom. The hardest thing for any business owner or any individual that’s trying to provide a solid financial foundation for themselves is to understand where their investments should go. The rising cost of everything means everybody’s having to penny-pinch even more than normal, and when it comes to something like investing, it’s not irregular to see upturns and downturns in the market. When it comes to investing in stocks and shares, it’s important to get to grips with a few fundamentals.
When Do You Need Returns on Your Investment?
Rather than thinking about profit or loss, it’s far better for you to think in terms of timescale. Because there are a wide variety of stocks and shares on the market, and with each product comes a degree of volatility. New investors are going to consider whether they should put any of their finances into any product at such a difficult time in the world. The reality is that you have to look at whether you need the money now or in the future.
A great example is an investment like cryptocurrency. You can see that it’s had a volatile time, not just in recent years, but ever since it became widely known. AI traders like Bitcoin Motion are helping investors to bridge the gap by automating aspects of trading, but the fact is that with any new or old currency, you’ve got to ask yourself if you need the money right now. If you have some savings, you can invest and you don’t need the money for at least 5 years, you can put some money in.
Holding Your Nerve
Any seasoned investor will tell you about the importance of long-term investment. It’s a hallmark of amateur investors to want short-term results and nothing more, but this is a very myopic approach to investing because anybody who is looking to make an immediate profit is better off investing in a high-interest savings account. This means you can see your money compound fairly regularly. The fact is that there have been major highs and lows over the last few years. The bear market, when a market experiences prolonged declines in price, that occurred in 2020 bounced back and hit new highs by the end of August 2020.
In 2022, we’re seeing a very similar set of circ*mstances. There’s high inflation, interest rate increases, and naturally, those who are looking for short-term gains are going to be disappointed if they invest in stocks and shares.
What Does It Take to Be a Sensible Investor During Tough Times?
The reality is that we can never predict the future. You can purchase shares in individual companies or buy into a fund that tracks an index or invests in a wide variety of companies; this latter option is going to diversify your portfolio. Arguably, this is the best way to be a sensible investor during tough times. However, the most important thing is to remember that these things have all occurred before. There is nothing new, no matter how much scaremongering occurs online.
The financial crash in 2008 and the Black Monday crash in 1987 are two major events that occurred within the last 40 years, a very minuscule time in investing. It’s very easy to think that any downturn in the market means you should be swift in pulling your investment out, but this is why it’s important to look at seasoned investors such as the Warren Buffetts of the world. These people always understood the value of a long-term investment.
The problem we all have in the modern world is that when it comes to investing and stocks and shares is that people want to jump onto a sure thing. People get cold feet instantly. In order to be a sensible investor, you’ve got to understand what you wish to achieve from your investments. If you don’t go in with a plan, you aren’t going to be able to find the right stocks and shares that suit your risk tolerance, and when something comes up that causes a wobble in the market, you are going to panic and pull out. It’s far better to aim for any form of profit rather than setting yourself a specific amount.
When we talk about being a sensible investor, it’s not about finding the right products or shares, but about ensuring that you have an understanding of what it takes to achieve your financial goals. Investing is an incredibly diverse approach and doesn’t just cover stocks, shares, or cryptocurrency, it can involve profiting through property or even having a good savings account or a Roth IRA. If you are looking to put money into something right now, during these tough times, you’ve got to make sure that you are prepared to weather the storm.
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FAQs
Is now a good time to invest in stocks? If you're looking to invest for your future -- five, 10, or 40 years from now -- now is as good a time as ever to buy stocks. Despite ongoing recession fears, it's important to remember the market is forward-looking. Stock values are based on future expected earnings.
How much should I be investing right now? ›
Generally, experts recommend investing around 10-20% of your income. But the more realistic answer might be whatever amount you can afford. If you're wondering, “how much should I be investing this year?”, the answer is to invest whatever amount you can afford!
Why does it make sense to start investing right now? ›
The earlier you start investing, the faster you can grow your money and make it work for you. Inflation means your money is losing value when it's not invested. Saving and investing are different. It's important to do both, for money you may need in the near future (savings) and in the long term (investing).
How effective is investing? ›
Investing is an effective way to put your money to work and potentially build wealth. Smart investing may allow your money to outpace inflation and increase in value. The greater growth potential of investing is primarily due to the power of compounding and the risk-return tradeoff.
Is it a good day to invest in stocks? ›
The Most Lucrative Day
Many forums will tell you that Monday is the best day to buy stocks, while Friday is the best day to sell stocks. The logic behind this advice is that stock prices are said to be at the lowest on a Monday (meaning you will buy shares at a lower price).
What is the best investment right now? ›
ETFs are the most commonly recommended investment right now, according to a recent survey of 208 financial planners conducted by the Journal of Financial Planning and the Financial Planning Association.
Should I invest or save right now? ›
How much to put toward savings versus investing depends on your current needs and your future goals. If you're unable to cover three to six months' worth of expenses with savings, it's best to prioritize that before beginning to invest for long-term goals like retirement.
Am I investing enough? ›
How much should you be investing? Some experts recommend at least 15% of your income. Setting clear investment goals can help you determine if you're investing the right amount.
Is $100 a week enough to invest? ›
$100 per week adds up to $15,600 in three years
There are 52 weeks in a year. That means that, after a full year of saving, $100 per week adds up to $5,200. There is no sensible stock that will get you to $1,500 per year with $5,200 invested — that's a 28% yield!
What is the smartest thing to invest in right now? ›
11 best investments right now
- Money market funds.
- Mutual funds.
- Index Funds.
- Exchange-traded funds.
- Stocks.
- Alternative investments.
- Cryptocurrencies.
- Real estate.
Investing provides the potential for (significantly) higher returns than saving. As your investments grow, they allow you to take advantage of compounding to accelerate gains. Investing offers many different access points and strategies, from individual stocks and bonds to mutual or exchange-traded funds.
Why do you need to invest now? ›
The longer you wait, the less likely you are to benefit from those final years of growth, when your balance could already be much larger. Investing now to take advantage of compound growth can give you a head start, even if you don't know what your goals are.
Why is it important to invest? ›
As savings held in cash will tend to lose value because inflation reduces their buying power over time, investing can help to protect the value of your money as the cost of living rises. Over the long term, investing can smooth out the effects of weekly market ups and downs.
Does investing really help? ›
If you have built up your emergency fund and don't carry any high-interest debt, investing your extra money can help you grow your wealth over time. Investing is crucial if you're going to achieve long-term goals like retirement.
Is it still good time to invest? ›
Stock prices have surged significantly over the past 18 months. The S&P 500 is up by 45% since it bottomed out in October 2022, while the tech-heavy Nasdaq has soared by a whopping 58% in that time. Investing now, then, means paying much higher prices than you would if you'd bought a year or two ago.
Is it better to save or invest right now time? ›
If you have built up your emergency fund and don't carry any high-interest debt, investing your extra money can help you grow your wealth over time. Investing is crucial if you're going to achieve long-term goals like retirement. Real-life examples are the best way to illustrate this, Keady says.
How to get 10% return on investment? ›
Where can I get 10 percent return on investment?
- Invest in stocks for the short term. ...
- Real estate. ...
- Investing in fine art. ...
- Starting your own business. ...
- Investing in wine. ...
- Peer-to-peer lending. ...
- Invest in REITs. ...
- Invest in gold, silver, and other precious metals.
There is no better time to start investing. It is very difficult to time the markets and although the markets are due for a correction, it would not be wise to wait further. Also, when it comes to SIPs, there is not much merit in timing the markets. We would suggest you invest in different mutual fund categories.
Should I pull my money out of the stock market? ›
Unlike the rapidly dwindling balance in your brokerage account, cash will still be in your pocket or in your bank account in the morning. However, while moving to cash might feel good mentally and help you avoid short-term stock market volatility, it is unlikely to be a wise move over the long term.
