While the past year has been incredibly volatile, the stock market is thriving resolutely through all these factors. Because the market is based partially on investors’ feelings and reactions to external elements, it makes sense that there have been changes with the uncertainty of the pandemic.
However, variation is inherent in the market, and is not a reason not to get involved. Whether you’re a seasoned investor, or just starting out, this can be an auspicious time to invest.
In fact, this time period holds extraordinary potential for investors. By keeping a few key circumstances in mind, you can access the market’s capacity and significantly advance your future prosperity.
Calculate the risk you can handle
The first thing to consider is how much risk you can take on yourself. Do you have an emergency fund? If not, you need to gather this in advance of making any investments. You should have 3-12 months of backup savings before you invest in case of personal or professional difficulties.
Think long term
The pace at which you want a return on your investment will impact your decision on how and where to invest. Are you searching for short-term or long-term investment options? If you’re looking for a short/medium term return, it may be better to place your money in a savings account with a good interest rate (1-2%). If you’re interested in a long-term return (with more potential for growth), then you can examine an investment in the stock market.
Whether or not you are interested in short or long-term investments, it’s important to diversify your portfolio. Investing in funds, where an expert broker invests your money for you, can be a good option, as well as individual stocks in companies you want to stake a claim with and high-interest savings accounts or CDs.
Stay patient and informed
Since the overall trajectory of the stock market is up, it’s important to remain level-headed with your investments. When the market does slump, it’s often due to unnecessary and ill-advised panic selling, so stay firm and trust in the market to recover naturally.
Because stocks values are based on perceptions, tapping into financial news outlets and what experts are saying can help you stay up-to-date on all the movements of the market, and be aware of what factors may be influencing its direction.
Use this guidance to open up cautiously to the stock market and get the best return on your investment. For all types of investors, having expert guidance can alleviate the strain of investing.
If you’re interested in using a financial advisor to help you, contact our team today. We’re tax and investment experts who are well-informed as to the best stock and investment options for you. Contact Donohoo Accounting Services today for information about your tax and financial issues, or to schedule a free consultation. For more tips and our latest updates, check us out on Facebook, Twitter or LinkedIn!