Regardless if the U.S. is entering (or already has) a recession, there’s no question we’re facing some tough economic times. As a result, people are saving more, corporate profits are lower and the near-term future is bleak. This all translates to a declining, volatile stock market.
It’s more important than ever during these times to not follow the crowd if you have a long-term investment horizon. As people reduce or stop investing all together, you should be continuing to buy during a recession. This is the time that prudent investors build great wealth.
Sure, the short term may not be pretty, but stocks are cheap and the American economy will survive. Nobody can accurately predict a bottom of the market, and you want to be sure you are part of the rebound.
Since the bottom cannot be predicted, it is important to stick to your investment strategy. Remind yourself why you are investing in stocks. You know stocks are volatile, you know there is a potential to lose money, but you also know that by regularly investing in a diversified portfolio you will build great wealth over time. That’s because the stock market always prevails.
As William Bernstein, Financial theorist and author of “The Four Pillars of Investing: Lessons for Building a Winning Portfolio,” states:
If you think about it logically, you are rewarded for owning stocks precisely because they are risky; the dicier things look, the more money you can expect to make in the long run.
Now more then ever you want to stick to your investment plan. If you are a long-term investor, keep investing regularly and stay diversified to protect your downside. You don’t want to look back years from now and realize you missed the opportunity of a lifetime.
Millionaire Money Habit: Hundreds of studies show that you can’t accurately time the market, but you can take advantage of a cheap market. Outsmart the average investor by taking advantage of the great buying opportunities that are created by fear and uncertainty in the market. -RT
photo by fyuryu
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