The stock market has been rallying in recent weeks, with the S&P 500 up more than 12% over the past month. The Nasdaq has also entered a bull market after rising more than 20% from its low in mid-June.
However, it’s uncertain whether these gains will last. While many investors are hopeful that the worst of this bear market is over, some experts warn that this surge is only temporary and the market still has further to fall. Right now, though, it’s too soon to tell whether the market is on the road to recovery or a steeper drop is yet to come.
That can make it challenging, then, to decide when to invest. If stock prices are on the way up, now could be a smart buying opportunity. But if this bear market isn’t over yet, it could be tempting to wait a little longer. What’s the best option for you?
Should you invest now or wait?
Economic uncertainty can be difficult to stomach, and even the experts can’t predict exactly what the market will do. Fortunately, it may not make a difference to your investing strategy.
Now could be a smart time to invest regardless of what happens with the stock market. There’s not necessarily a right or wrong time to buy, and investing during a downturn isn’t as risky as it may seem.
This is because short-term volatility doesn’t matter as much as long-term performance. The stock market always experiences ups and downs in the near term, but over the long run, it’s historically earned positive average returns.
In other words, as long as you’re holding your investments for at least a few years, it doesn’t necessarily matter what the market does in the next few days, weeks, or months. Even if you invest today and stock prices plummet tomorrow, it won’t have a significant effect on your long-term strategy.
The secret to keeping your money safe
Besides maintaining a long-term outlook, the other way to ensure your investments are as safe as possible is to choose the right stocks.
If this bear market isn’t over yet and stock prices fall once again, strong investments have a much better chance of rebounding. The best stocks are the ones from healthy companies with the potential for long-term growth. These businesses have solid underlying fundamentals, a competent leadership team, and a competitive advantage in their industry.
By researching stocks carefully, your portfolio is far more likely to survive a market downturn. If stock prices fall in the near future, the best thing you can do is to simply stay focused on the long run and wait for your investments to bounce back.
Keep in mind that, in some cases, it could potentially take months or even years for the market to fully recover. But as long as you’re investing in the right places and holding those stocks for the long term, you can get through a market slump unscathed.
Nobody knows for certain whether the market will continue thriving or whether we’re headed for another downturn. But with the right strategy, you can rest easier knowing your money is protected regardless of what happens.