How Sensible Is Investing Right Now?

StrategyDriven Practices for Professionals Article | How Sensible Is Investing Right Now?

With everybody’s concerns about the economy right now, it’s easy to feel suckered into the notion of doom and gloom. The hardest thing for any business owner or any individual that’s trying to provide a solid financial foundation for themselves is to understand where their investments should go. The rising cost of everything means everybody’s having to penny-pinch even more than normal, and when it comes to something like investing, it’s not irregular to see upturns and downturns in the market. When it comes to investing in stocks and shares, it’s important to get to grips with a few fundamentals.

When Do You Need Returns on Your Investment?

Rather than thinking about profit or loss, it’s far better for you to think in terms of timescale. Because there are a wide variety of stocks and shares on the market, and with each product comes a degree of volatility. New investors are going to consider whether they should put any of their finances into any product at such a difficult time in the world. The reality is that you have to look at whether you need the money now or in the future.

A great example is an investment like cryptocurrency. You can see that it’s had a volatile time, not just in recent years, but ever since it became widely known. AI traders like Bitcoin Motion are helping investors to bridge the gap by automating aspects of trading, but the fact is that with any new or old currency, you’ve got to ask yourself if you need the money right now. If you have some savings, you can invest and you don’t need the money for at least 5 years, you can put some money in.

Holding Your Nerve

Any seasoned investor will tell you about the importance of long-term investment. It’s a hallmark of amateur investors to want short-term results and nothing more, but this is a very myopic approach to investing because anybody who is looking to make an immediate profit is better off investing in a high-interest savings account. This means you can see your money compound fairly regularly. The fact is that there have been major highs and lows over the last few years. The bear market, when a market experiences prolonged declines in price, that occurred in 2020 bounced back and hit new highs by the end of August 2020.

In 2022, we’re seeing a very similar set of circumstances. There’s high inflation, interest rate increases, and naturally, those who are looking for short-term gains are going to be disappointed if they invest in stocks and shares.

What Does It Take to Be a Sensible Investor During Tough Times?

The reality is that we can never predict the future. You can purchase shares in individual companies or buy into a fund that tracks an index or invests in a wide variety of companies; this latter option is going to diversify your portfolio. Arguably, this is the best way to be a sensible investor during tough times. However, the most important thing is to remember that these things have all occurred before. There is nothing new, no matter how much scaremongering occurs online.

The financial crash in 2008 and the Black Monday crash in 1987 are two major events that occurred within the last 40 years, a very minuscule time in investing. It’s very easy to think that any downturn in the market means you should be swift in pulling your investment out, but this is why it’s important to look at seasoned investors such as the Warren Buffetts of the world. These people always understood the value of a long-term investment.

The problem we all have in the modern world is that when it comes to investing and stocks and shares is that people want to jump onto a sure thing. People get cold feet instantly. In order to be a sensible investor, you’ve got to understand what you wish to achieve from your investments. If you don’t go in with a plan, you aren’t going to be able to find the right stocks and shares that suit your risk tolerance, and when something comes up that causes a wobble in the market, you are going to panic and pull out. It’s far better to aim for any form of profit rather than setting yourself a specific amount.

When we talk about being a sensible investor, it’s not about finding the right products or shares, but about ensuring that you have an understanding of what it takes to achieve your financial goals. Investing is an incredibly diverse approach and doesn’t just cover stocks, shares, or cryptocurrency, it can involve profiting through property or even having a good savings account or a Roth IRA. If you are looking to put money into something right now, during these tough times, you’ve got to make sure that you are prepared to weather the storm.

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