Should I Buy Stocks Now? 6 Factors To Consider

One of the biggest questions on everyone’s mind is if they should buy stocks now. When times are great and the stock market is at all-time highs, people often worry about an impending crash.

Historical Returns of Stock Markets During the 100 years, we have experienced two devastating World Wars, several pandemics, Black Monday, high inflation, the Japanese crash, the Dotcom crash, the Housing Bubble, and several other shocks to the stock market. Despite all the horrible economic events, the market has continued to march upwards over a long period.

Not Many Alternatives To Investing 1. Sitting in cash: In the past, when interest rates were higher, money at least yielded a positive return. With interest rates now at rock bottom, waiting in cash for an extended time is a losing proposition. Inflation would eat up your principal.

Stocks are volatile. Volatility is a feature of the stock market, and there is nothing you can control. 

Acknowledge The Volatility

Figure Out Your Pain Threshold

It can be hard to see your stock portfolio cut in half. During the housing crash, I was overweight in financial stocks. It was not easy to watch most of them drop by 50%, and some, like Lehman, even went bankrupt.

Diversify With Other Assets

Asset allocation involves balancing risks and rewards in your portfolio by investing in several different assets.  The purpose of adding assets besides stocks is that when stocks are down, the other assets can help stabilize the portfolio.

When we analyzed the best-performing stocks, it was apparent that a diversified index fund was a better approach for most investors.

Final Thoughts On Should I Buy Stocks Now

Bottom line, there are not many great alternatives when avoiding stock investing. A better course of action would be to acknowledge the volatility, define your time horizon for stock investments, develop a diversified asset allocation plan, ignore daily stock news, and automate your investments.

You would never need to worry about when to buy and sell stocks. And you would still vastly outperform many other investors.

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