The COVID pandemic has thrown the US economy out of balance in ways that many people can barely fathom. Many retirees and other investors suffered during the stock market crash because they lost much of their disposable income. With the economy and the future still so uncertain, is now a good time to buy stocks?
In February and March of 2020, the economy suffered one of the greatest crashes in history. But since then, the stock market has grown at surprisingly rapid rates.
One of the most important things to understand is the difference between the economy and the stock market. The economy refers to the state of the US in the present. It encompasses unemployment rates, profit downturns, industry growth, and other factors, while the stock market encompasses the value of shares in companies throughout the US.
Investors in the stock market are predicting the future. That’s why so many investors dumped their stocks when COVID first hit, leading to a crash. As prospects continue to improve, investors are buying stocks at low prices with the hopes that they’ll grow during the next few months.
Though the initial plunge has scared many people away from the stock market, those who have invested have seen a steady increase in growth over the past months. There’s no reason not to invest, especially if you’re cautious about choosing safe options.
Financial experts also say that there may never be a “right” time to invest. It doesn’t matter when you sink your money into the market — what matters is that you take a long-term approach to investment. The game is a long one, and you’re much more likely to reach long-term goals with stock market investments.
When you save for retirement or for your child’s college tuition, you have years for your assets to grow. Drops like the one caused by COVID don’t pose a significant threat to you. They’re irrelevant when compared to how growth and ongoing dividends allow you to accrue wealth over time.
Dollar-cost averaging is a potential technique you can use to remain calm when the market is volatile. This strategy involves investing a predetermined amount one or two times every month. It’s much more stable and rewarding than trying to predict the market’s future.
Originally published at https://markkemp.org.