Should you buy stocks in a declining market?

The volatile stock market in the wake of the coronavirus pandemic has left some wondering when is the best time to buy more stocks in a declining market.

But many financial advisers say there is no “right” time to buy more stocks. Because no one knows what will happen with the market, it’s impossible to say when it will bottom out and stock prices will be at their lowest, Jennifer Weber, vice president of planning, told CNBC Make It. financial for Weber Asset Management.

“We have no idea how long this volatility lasts, nor anyone else,” Weber said. “It is important to stay calm.”

As Berkshire Hathaway CEO Warren Buffett recently reiterated, “you can’t predict the market by reading the daily newspaper.”

Until then, however, you should still invest consistently for retirement and other financial goals. This strategy is called the average cost in dollars.

You can’t time the market

Average dollar costs simply mean regularly investing a large portion of the money at regular intervals over time. If you have $ 1,000, you can invest at ease, add $ 100 to your portfolio every week, or every two weeks, rather than all at once.

This takes emotion out of the equation and prevents you from trying to time the market. Instead, you are investing the same amount of money no matter what the market is doing. If you put part of your salary into your 401 (k) account or into an outside retirement account each month, you are already benefiting from this strategy.

If the market continues to fall, remember that for many investors everything is fine: you are investing your money for the long term, not for this week or even this year. Unless you are near retirement, you will likely have time to recover. Future gains are never guaranteed, but the stock market mirrors the economy, which will eventually recover from the coronavirus. History shows that if you can weather market lows, stocks should gain in value over time.

Many advisers suggest that you don’t change your investment strategy at all in times of uncertainty and instability. You don’t want to invest more than what you can actually afford because you’ve heard it was a good buying opportunity. Now is the time to be careful with your savings and spending, Florida-based certified financial planner Jon Ulin told CNBC Make It. Don’t invest the money you’ll need in less than five years, he says.

If you are losing your job or are recently retired, you don’t want to have to sell stocks at a low point during a bear market.

Jon ulin

Certified financial planner

“Now is not the time to jump into a big spending spree to reduce stress,” Ulin said. “If you are losing your job or are recently retired, you don’t want to have to sell stocks at a low point during a bear market or take a distribution or loan from your 401 (k) or IRA account because you run out of money. “

For most investors, the total time they are invested in the market, rather than the day they entered the market, will have the greatest effect on the potential growth of their investment. The longer you are invested, the more your money can rise in value and the more time you have to bounce back from a downturn.

Keep investing at regular intervals and keep contributing the same amount no matter what the market is doing. Let the average dollar cost do the rest.

To verify: The best credit cards of 2020 could earn you over $ 1,000 in 5 years

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