The news keeps talking about a recession that’s coming. Volatility is sky high. The trade war will ruin the economy! It’s financial doom and gloom every day in the news! Because of what you read in the news day after day, it’s natural for you to ask if you should be investing when a recession is coming. There are a few things that cause you to second guess yourself and not invest.
The News Wants You to Watch
If it bleeds it leads. There’s nothing better than an economic crash and the markets in turmoil to get people scared so they keep watching the news. When the economy is on fire, the only way to get people watching the news is to predict a recession or an economic crisis. If you’re investing for the long haul, which I recommend that you do, then there is no need for you to know if we are in an economic boom, a recession, or even a depression. This means you can turn off the news when it comes to investing because the news of the day is irrelevant to how you invest.
Timing the Market
Don’t try to time the market! If you are investing for the long haul, then get your money into the market because the market has always gone up over time. Sure, some people can get lucky and “time the market”, but that doesn’t mean you will. Start investing in mutual funds or index funds after you have your fully funded emergency fund in place. Invest a portion of your income each pay period. If the market goes down, you invest. When the market goes up, you invest. You end up buying shares over time and averaging your basis.
When your retirement is invested in equities, and the news keeps telling you that you will lose that money because an economic recession is coming, you get scared. I understand that. However, the stock market goes up over time. When you take your money out of the market, when the market goes back up, you lose out on those gains.
Investing for 20 Years
Before taking money out of the market ask yourself if you invested that money for one year or for “20 years”. If you invested that money for one year then get it out of the market. Put it in a money market or savings account so you have it when you need it. If you put your money in the stock market so that you can build wealth, then leave it invested.
You have heard that the only people who get hurt on a roller coaster are the ones who jump off. When the markets get volatile, and the news claims a recession is coming, or even if the stock market crashes, don’t jump off. One secret to investing is to invest for the long haul.
If you have invested money for it to grow keep it invested. Don’t take it out because you think a recession is coming. I guarantee you one is eventually coming, and it will come and go. You don’t get rich by timing the markets. You don’t get rich by having your money sitting on the sidelines. People build wealth by investing money each pay period for several years. Very few people make it big in a short amount of time. Have the right mindset to know that investing is a marathon and not a sprint.