To say that the stock market has been unstable for the past few weeks might be an understatement. Many investors are seeing substantial losses in their portfolios as tech stocks plunge and the broader market follows suit. And many near-retirees are beginning to worry that market conditions will force them to delay the departure of their workforce.
It is certainly not an easy time to make investment decisions. But one decision you may want to make is to continue investing, even when the market is turbulent. This is why.
1. You can get some discounts
Stock values are down right now. That’s not good when it means your IRA or 401(k) plan balance has tanked. But does give you the opportunity to pick up some investments in the relatively cheap.
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That doesn’t mean you should go out and buy stocks with stock prices that are at 52-week lows. What it does mean, however, is that if there are stocks on your wish list, you might consider buying them now, when it’s possible to get shares at a lower price.
2. The stock market has a long history of recovering from recessions
Right now, stock market conditions look bleak. But this is not the first time something like this has happened.
Think back to March 2020, when stocks fell into bearish territory in the wake of the COVID-19 outbreak. Back then, many investors were panicking, and understandably so. But after a brief (albeit intense) crash, the stock market went on to have a fantastic year.
In all, the stock market has a long history of recovering from shocks like the one it is experiencing today. And if you invest now and leave your portfolio alone for many years, there’s a good chance you’ll end up making money.
How to invest when the market is unstable
When stocks are extremely volatile, you need to be strategic in your investment choices. A good bet in that regard is to stick with companies you know and believe in.
That said, you could also consider expanding into different corners of the market to make your portfolio more diverse. That could actually buy him a degree of protection at a time when stock values are so precarious.
One option you can consider in that regard is to buy REITs or real estate investment trusts. REITs are known to pay higher than average dividends, and if you don’t already have any real estate exposure in your portfolio, they’ll give you some.
Putting some money into the broad market is also worth considering. loading in S&P 500 ETFs, for example, give you instant diversification. And if you buy those stocks when the general market is down, there’s a good chance they’ll appreciate in value over time.
Being an investor during periods of turbulence is far from easy, even if volatility is something you are used to. But it pays to keep investing even when the market seems to be going down. In the long run, it’s a move that could really pay off.
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