You have probably heard that phrase before. It’s often used to describe a stock market play. The term means buying a stock (or another investment vehicle) currently trading at a lower price than it was at an earlier date. So, if you buy the stock now, you hope it will bounce back (or “rebound”) to a higher price in the future.
When stocks are plunging, and investors are in a panic, many will look to sell their stocks and move to the sidelines. They do this because they know that stocks usually rebound after big losses. The stock market is known for volatility. It’s usually considered healthy for markets to experience significant swings both up and down. A down day in the stock market, also known as “a bear market,” is an opportunity for investors to buy stocks at a discount.
After steep gains just a few months ago, it’s been a rocky road for investors in 2019. The S&P 500 has tumbled more than 11% from its September high, leaving many investors wondering whether it’s time to throw in the towel. But before you give up, consider this: Long-term investors have ridden out bear markets. The 87-year-old S&P 500 (as of April 2019) has seen 19 bear markets.
What Is Your Time Horizon?
A person who chooses to delay gratification is setting aside an immediate reward for a larger reward later. Short-term rewards are powerful because they grant immediate pleasure while delaying them provides a long-term benefit.
When it comes to investing, time really can be money. The most powerful way to grow your money is by sticking to an investment plan for decades. The longer you’re able to hold onto your investments, the longer your money has to grow. But, while patience is a virtue, you don’t want to be holding on for too long. After all, if your investments don’t give the expected returns, you could lose out.
Consider this: If your primary care doctor asked you to think about your “long-term health goals,” would you be able to describe what you want your future to look like? If your answer is “I have no idea,” consider this: By not setting long-term goals, you’re missing out on opportunities to manage your health proactively.
What Is Your Risk Tolerance?
We all live within a certain comfort zone, whether related to finances, careers, relationships, or lifestyle-related choices. Some of us are comfortable with smaller amounts of money or assets, while others are more comfortable pursuing higher-paying or higher-risk careers. When it comes to investing, your risk comfort level determines the types of investments you choose and the allocation between the various types of investments.
Once your finances are in order, it’s time to work on a plan that will prepare you for the unexpected. Your risk tolerance determines how much risk you can handle when investing. Learn what your risk tolerance means and how it’s determined, so you can create a balanced investment portfolio and feel more confident in your choices.
Best Investment Strategies
Investing money is essential to building wealth and securing your financial future. Unfortunately, investing isn’t as simple as handing over cash, and many people feel confused by the prospects. Will you make or lose money? Is it safe? How do you do it? Luckily, there are simple steps you can take to give yourself a good foundation. Even getting started with investing can be easy if you know where to begin.
Investing your money can be a great way to make more money. But it can also be risky to lose a lot of money. Whether it’s stocks, bonds, real estate, precious metals, or bitcoin, every investment has a different level of risk and volatility. The trick is to invest in the right type of investment for you. Diversification is a key part of investing. Having all your money in one investment is never a good idea. For example, investing 50% of your money in stocks, 10% in bonds, 15% in real estate, and 15% in precious metals is a smart way. Asset allocation just means dividing your investing dollars into different types of assets.