If you are in your early 20s or 30s, do you have a retirement savings plan? If not, now is the time to start one and invest in the stock market now.
In fact, regardless of your age, if you aren’t participating in an employer sponsored retirement savings program, now is the time to get your own personal plan started. If your company has a plan available, it is quick, easy, and affordable to get started.
Most financial experts recommend scattering your money between stocks and bonds. Unfortunately, right now, you may be panicking. 2008 was not a good year for the stock market and the economy as a whole.
Most individuals invested in the stock market saw their retirement savings decrease, some significantly. Most want to pull out of troubling stocks to invest in new or make the switch to low-risk bonds. On the other hand, many financial experts are advising investors to sit back and wait.
Sit back and wait? Yes. Over time, the stock market has had its up and downs. It can take years, but it always bounces back. As stated above, 2008 was the year that the stock market set records and not good ones. It was near an all-time low. As previously mentioned though, the market always survives the difficulties. It usually bounces right back.
If you are young and do not anticipate retiring for 10 years or more, you are in a good position. You wait for that bounce back. Now is actually the best time to invest more money. Most financial experts say it cannot get much worse than this. In a year or two, stocks will start to improve. When they do, you make money because you bought stock when it was at a low.
If you are in your late 40s or early 50s however, you should opt for low-risk investments, such as money market funds and bonds. If you are younger though and just getting started, you have time on your side. That time allows you to dabble in the stock market and take risks. Since you can wait out the poor economy and stock market, you stand a chance to profit from its turn around. That is why right now is the perfect time to invest in stocks.
At first glance, you might assume the opposite. Why is now the best time to invest in the stock market? Both the economy and the stock market are in trouble. Stocks are nearing all-time lows and the economy is suffering. Millions of people are losing their jobs, taking pay cuts, and losing their homes.
So how could now possibly be the best time to invest in the stock market?
Yes, both the economy and the stock markets are suffering that is true. However, they both have a history of bouncing back. Every few years, this happens. To understand the process, you need to think long-term.
By thinking long-term, you avoid the short-term complications that are causing many to sit on the sidelines. They believe that since the stock market is suffering there is too much risk involved. Of course, there are always risks with stocks. The key is to do research first.
As for making that profit, it is easy. Stocks are near all-time lows. Some cannot get much lower. In these cases, they have nowhere to go but up. Remember, look at the long-term history of a stock. If it took a sudden dip around 2007 or 2008, it was due to the poor economy.
All industries, including auto, technology, financial, food, and retail took a hit. With a poor economy, consumers spend less. As the economy improves, they will start to spend more. These once profitable stocks will rise from the ashes. If you purchased stock now, at near all-time low prices, you automatically profit.
As previously stated, if you are in the late 40s or early 50s and just setting up your retirement account, you should focus on low-risk investments. This is because you are nearing retirement. Yes, invest in money market accounts and bonds, but why not opt for a few stocks? Some financial experts imply the economy will bounce back in under 5 years. This still gives you time to make a profit.
Remember it is a short-term bump in the road. As mentioned above multiple times, the stock market always bounces back. Just consider it a bump in the road and nothing more. Soon that bumpy road will flatten and you will be left with a smooth and hopefully money-filled path.
Focus on something else. It is normal to be worried about your retirement. No one wants to lose money, especially their retirement savings. Once again, and it cannot be emphasized enough, the stock market will recover. Pass the time by doing something you enjoy or taking up a new hobby. In fact, a great hobby is frugal living.
If you are worried about having enough money to retire, start building a reserve savings account now. You can use this money for retirement or costly emergencies along the way. Make a game out of saving money. Collect all your change and guess how much you have. Deposit it in a savings account and get the total. Look for the best sales, use coupons/discount offers and so forth.
As you can see, there are many ways that you can take your focus off the troubling aspects of the stock market and invest in it instead. It is okay to be worried about your financial future, but don’t let it consume your life, especially if you still have years to prepare.