Here’s a provocative question: is this a good time to start investing in stocks?
It’s a good question too. After all, the stock market has shot up and down like a roller coaster this year. It was volatile. Unpredictable. Wild. We can understand if you hold back from wading.
So we asked a certified financial planner for advice. Robin Hartill, a CFP who is also the editor and financial advisory columnist for The Penny Hoarder, weighed in.
Her advice: take the foresight. The stock market will add your money to over time, so you may as well get started sooner than later.
“The timing of your investment is much less important than the time you have to invest,” says Hartill. “The S&P 500 has achieved inflation-adjusted returns averaging about 7% per year for the past 50 years. The cost of waiting for the perfect time to invest is high. You’re missing out on long-term growth. “
Here, too, one has to take foresight. This is what investing is all about.
“If you were hoping to make money quickly in the stock market, now may not be a good time,” she says. “We are still in a recession, but the stock market has recovered. But real investing is not about making quick money. It’s about growing your money over time. ”
How to Start Investing – and the Recommended Strategy of a CFP
Not sure how to start? You could start small.
You don’t have to start throwing thousands of dollars on full stocks to invest. In fact, you can get started with just $ 1 with an app called Stash. *
Stash lets you choose from hundreds of stocks and funds to build your own investment portfolio. It makes it easy by dividing them into categories based on your personal goals.
You also invest in fractions of stocks, which means you can invest in stocks that you normally couldn’t afford.
For example, Amazon stock has done pretty well, but a single share of Amazon costs more than $ 3,000. Stash makes it easy to buy a piece of Amazon when you can’t afford a whole share.
Hartill recommends budgeting a certain amount of money every month, no matter what.
“Rather than trying to time investments based on market events, the best way for most investors to build wealth is to use the dollar-cost averages,” Hartill says. “Budget a certain amount each month to invest in stocks and automatically invest, regardless of whether the market is rising or falling.
“Some people might not like this approach because they hope to pinpoint the exact point in time when the market bottomed out, but it rarely works that way. Instead, people miss out on the best days of the market, which often follow a crash and often overpay for stocks. Consistency is a much better strategy than market timing. “
If you sign up for Stash now (it takes two minutes), Stash will give you $ 5 after adding $ 5 to your investment account. Subscription plans start at $ 1 per month. **
* For securities priced above $ 1,000, fractional share purchases start at $ 0.05.
** You will also bear the standard fees and expenses reflected in the prices of the ETFs in your account, as well as fees for various ancillary services charged by Stash and the custodian.