Should you be worried about investing in the stock market right now? | Economic news

Stock prices fell again, ending the bear market rally that investors have been experiencing over the past month. Currently, the S&P500 is down more than 18% from its peak in early January, and some investors fear the market may have fallen further.

To be clear, no one – not even the experts – knows exactly what to expect over the next few months. The stock market can be unpredictable, so it’s hard to say if stock prices will continue to fall or how bad that fall could be if they did.

All of this uncertainty can be daunting, and that’s okay. But how worried should you be about the stock market? And should you still invest right now? Here’s what you need to know.

What will happen with the stock market?

Again, no one knows for sure how stocks will perform in the short term. However, the market itself has a long history of rebounding from downturns and continues to see positive average returns over time.

In other words, no matter what happens in the weeks or months to come, the market will eventually recover. The best you can do, then, is to try to keep a long-term view and avoid getting caught up in the daily fluctuations of the market.

This does not necessarily mean that you should not keep up to date with market news. But do your best to avoid letting your emotions guide your decisions. Downturns can be nerve-wracking, but the market has seen dozens of crashes, corrections, recessions, and bear markets over the years. And it is recovered from each of them.

^ SPX data by YCharts.

Also keep in mind that as long as you stay invested, you are unlikely to lose money. If you take your money out of the market after stock prices fall, you’ll lock in those losses. But if you just hold onto your investments until the market inevitably recovers, you can get away with it unscathed.

Is it a good time to buy stocks?

It’s often difficult to invest when the stock market is choppy, but it can actually help you make more money over time.

When the market is down, stock prices are lower. Although this may not sound like a positive thing, it does mean that you can load high quality stocks for a fraction of the price. Some stocks are down 40%, 50%, 60% or more from their highs, making it a fantastic time to invest at a discount right now.

Once the market recovers, most stocks should rise in value again. When this happens, you could potentially see significant gains.

The key is to make sure you choose the right investments. Not all stocks can recover from a downturn, but strong companies are the most likely to pull through. By filling your portfolio with healthy companies and holding those stocks for the long term, your investments are much more likely to survive no matter what happens with the stock market.

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