The stock market has rallied in recent weeks, with the S&P 500 up more than 12% in the past month. The Nasdaq has also entered a bull market after rising more than 20% from its mid-June low.
However, it is uncertain whether these gains will continue. While many investors are hoping that the worst of this bear market is over, some experts are warning that this rise is only temporary and the market has yet to fall further. At this point, however, it’s too early to say whether the market is on track for recovery or if it has yet to see a steeper decline.
That can make it a challenge to decide when to invest. If stock prices rise, this could be a smart buying opportunity. But if this bear market isn’t over yet, it may be tempting to wait a little longer. What is the best option for you?
Invest now or wait?
Economic uncertainty can be hard to bear, and even the experts cannot predict exactly what the market will do. Fortunately, it may not make any difference to your investment strategy.
This could be a smart time to invest no matter what happens to the stock market. There isn’t necessarily a right or wrong time to buy, and investing during a recession isn’t as risky as it seems.
This is because short-term volatility is not as important as long-term performance. The stock market always experiences ups and downs in the short term, but in the long run it has historically produced positive average returns.
^SPX data by YCharts
In other words, as long as you hold onto your investments for at least a few years, it doesn’t necessarily matter what the market does in the coming 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
In addition to 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 and stock prices fall again, strong investments have a much better chance of recovering. The best stocks are those of healthy companies with the potential for long-term growth. These companies have solid underlying foundations, a competent leadership team and a competitive advantage in their industry.
By examining stocks carefully, your portfolio is much more likely to survive a market downturn. If stock prices fall in the near future, it’s best to just stay focused on the long term and wait for your investments to bounce back.
Keep in mind that in some cases it can take months or even years for the market to fully recover. But as long as you invest in the right places and hold those stocks for the long haul, you can get through a market decline unscathed.
No one knows for sure if the market will continue to thrive or if we are headed for another downturn. But with the right strategy, you can rest easy knowing that your money is protected no matter what.