To say that the stock market has been choppy over the past few weeks might be an understatement. Many investors are seeing substantial losses in their portfolios as tech stocks tumble and the wider market follows suit. And many near-retirees are beginning to worry that market conditions will force them to delay leaving the workforce.
It is certainly not an easy time to make investment decisions. But one decision you might want to make is to keep investing, even when the market is turbulent. Here’s why.
1. You could get discounts
Stock markets are down right now. It’s not a good thing when it means your IRA or 401(k) plan balance has dropped. But he Is give you the opportunity to pick up investments at a relatively cheap price.
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That doesn’t mean you should go out and buy stocks that are at 52-week lows. What this means, however, is that if there are stocks on your wishlist, you might consider buying them now, when there is an opportunity to mark stocks at a lower price.
2. The stock market has a long history of recovering from downturns
Right now, stock market conditions are looking bleak. But this is not the first time such a thing has happened.
Think back to March 2020, when stocks plunged into bearish territory following the COVID-19 outbreak. At the time, many investors were panicking, and understandably so. But after a brief (albeit intense) decline, the stock market has had a fantastic year.
All told, the stock market has a long history of recovering from hits like the one it’s experiencing today. And if you invest now and leave your wallet alone for many years, chances are you’ll end up making money.
How to invest when the market is choppy
When stocks are extremely volatile, you need to be strategic in your investment choices. A good bet in this regard is to stick with companies you know and believe in.
That said, you can also consider diversifying into different corners of the market so that your portfolio is more diversified. It might actually offer you some degree of protection at a time when stock market values are so precarious.
One option you may want to consider in this regard is to buy REITs or real estate investment trusts. REITs are known to pay above-average dividends, and if you don’t already have real estate exposure in your portfolio, they will.
It is also worth considering investing money in the vast market. Loading on S&P500 ETFs, for example, give you instant diversification. And if you buy these stocks when the general market is down, chances are they will go up in value over time.
Being an investor in turbulent times is far from easy, even if volatility is something you are used to. But it is worth continuing to invest even when the market seems to be going only down. In the long run, this is a decision that could really pay off.
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