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Stock Market: Should I Invest Now Or Wait?

July 17, 2020

This year and especially March have shown how stable the situation on a stock market can be turned into a volatile one. For instance, such stock market indexes as The Dow Jones and the S&P have a huge drop in the markets. We witnessed a similar fall in the markets back in 2018. However, many many specialists presume that the situation in the stock markets in 2020 is much harsher than in 2018. 

However, many new and experienced investors start to ask burning questions. Has the current situation in markets hit the bottom? And if it so, should they start buying stocks? May stocks go even lower than now? To give an answer to these questions, let’s study approaches that smart investors use to land on feet. 

Stock markets might continue dropping

If we take a close look at the stock market, we can easily notice that coronavirus has affected not only people and their health. COVID-19 is also a reason for all contagious panic in supermarkets and clearly in stock markets. Those businesses, that decide to resume their working process during a pandemic, are not able to work remotely and, as a result, customers do not purchase their services and products. As a result, businesses become bankrupts. 

We painted quite a gloomy picture, however, let us say one more thing. Many presidents try to stay optimistic about the situation with coronavirus. The truth is this crisis might not end in the nearest future, thus these optimistic presidents start to prepare for a not very optimistic battle for the financial field. 

People started to infect massively earlier in February, however, the World Health Organization (WHO) stated it as pandemic on 11th March. The index of the Dow Jones had dropped by that time. If the coronavirus will last longer, the situation in the markets will become worse. 

The death toll is still rising, more and more big and small cities go on quarantine, the markets become more week making the situation harsher than ever. If we take a look at the well-known financial crisis back in 2008, we notice that the Dow Jones index dropped on more than 7 000 points. Many markets crashed, many indexes lost half of their value. The same situation is almost on the horizon. 

The situation may brighten

Do not lose your spirit, because forecasts are still forecasts and not real facts. If we see hopeful news about the situation with coronavirus or even cure for the virus the stock markets may improve their position. The thing is there is no need to wait when COVID-19 ends. We just need to see that the worse situation has ended, and markets may have some kind of stable ground. 

Investors decisions

While healthcare has issues with finding a proper cure, the financial sector suffers uncertainty. Whether investors need to put their money in stock or keep them safe and untouched for several years until they see the situation becomes more clear and certain. 

After many crises, investors have learned one thing. Even if the stock market faces downfall, it will come back stronger than ever. Thus, pay close attention to stocks that have good value. Those who invest in them today will get a reward tomorrow. However, waiting for lower positions on the market will get you to pass up a chance to make a profit. 

Stock Market
Stock Market

Your decisions 

We have asked the opinions of several experts on the matter of buying stocks or waiting until the better times. Jennifer Weber, the vice president of financial planning for Weber Asset Management, states that there is no such perfect time to purchase stocks. All forecasts may change, even if investors are sure about 99,9%. It is not known when current uncertainty will end, however, the best option for these situations is not to panic. 

Another specialist Warren Buffett, CEO of Berkshire Hathaway adds that reading everyday forecasts from newspapers will not help either. It does not mean you should forget about investing in your future. Last time we checked retirement and financial goals still exist. These actions have a specific name. It is dollar-cost averaging. 

Forget about timing the markets

So, what is dollar-cost averaging? It means you invest a regular sum of money at regular intervals of time. For instance, you have about $2,000 to invest. It is better to split this sum into smaller parts and invest them once per week or month than doing it at once. 

This way you stay calm and do not need to calculate the right time to invest. Now you have the freedom to invest your money whether on not the market has good conditions. If you are already doing such a thing, be sure you are doing quite a smart thing.

Even if the situation on the market drops you and other investors will not suffer. Mainly because you invest for a long term rather than for one day or week or month. Be sure, your investments will have a high chance to recover. Even if some will tell you that investing in the future can be dangerous, your retirement pillow will recover like the stock market and the economy itself from the pandemic. We have many cases throughout history that prove such a statement. 

We have one more piece of advice for one. Even if the market is volatile and you feel like panicking. Just do not do it. Keep calm and do not change the way you are investing. Even if it can be a good opportunity to invest more, you may lose everything you have. Jon Ulin, a certified financial planner from Florida, states that during such difficult times, you have to be cautious with all your investments and savings for the nearest five years. 

The expert also adds that the best option, for now, is to refrain from spending a lot of money to relieve some kind of stress. There might be a situation when you might get fired or retired and have issues with money. It does not mean you should dive into selling stocks when they have the lowest point or take loans from an Individual Retirement Account (IRA)

Take an example from successful investors who look into long term investments, rather than one-time actions. The first option brings more growth than the second one. Moreover, longer investments protect you from possible negative growth. 

Thus, remember to not be afraid to invest at strict intervals with the same amount of money. The technique we described above may help you depending on the situation on the market. 

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