Investing in 2020: Is now a good time to get started?
One of the best ways to grow your finances for the future is to invest, but with all the turmoil of 2020 and a volatile stock market, you might be wondering if investing in 2020 is wise. The stock market has been in a period of recovery for a few months now, but with the threat of a second wave of the virus and the uncertainty of the upcoming election, the market could fluctuate again. While everyone has their own concerns and different levels of risk tolerance, in general, you should not be worried about investing in 2020 as long as you are thinking long-term.
Why you should be investing in 2020
Everyone is in their own unique financial situation, and investing is a personal choice that requires careful thought and planning. If you are thinking about starting or continuing an investment strategy in 2020, you should consider the following factors:
- Your retirement is far off — If you are not currently retired or nearing your retirement, then you should consider investing now. The average annual return of the stock market is 8%, but there is obviously no guarantee this performance will repeat itself. Some years are going to be less than average, but if you still have years of savings ahead of you, you should see your earnings from investing go back up.
- You are retiring soon — Yes, we just said you should be investing if your retirement is far away, but if your retirement is near, you should still be investing. However, your strategy should change significantly. The market currently is setting records, but if you are worried about another drop in the market right before you retire, you can shift a larger portion of your portfolio into less risky investments or investments outside of the stock market, such as real estate, CDs or money market accounts.
- You are a conservative investor — If you are already a conservative investor, periods of volatility, such as the stock market drop in early 2020, should not be a major detriment. If another period of volatility is around the corner, your more conservative investments may be safer from the fallout.
- You have a higher risk tolerance — A lot of people sold their stocks out of panic when the COVID-19 pandemic struck. Other investors bought up these stocks, and now that the market has recovered and is doing well, these investors are the ones reaping the benefits.
The lesson here is not that you should always buy stocks when everyone else is selling, but that the potential returns for risky investments like these can help you potentially earn a lot more than you could if you stick with conservative investments.
You can see that in these four different and even somewhat contradictory circumstances that investing in 2020 may be beneficial. This type of advice can help you think about investing and make a decision, but when it actually comes to making an investment, you need the help of a financial professional.
Talk to a ProVise CFP® professional about investing in 2020
Whether you are just getting started or already have some investments, if you want to invest in 2020 you need the help of a financial professional. Our CERTIFIED FINANCIAL PLANNER™ professionals at ProVise Management Group can work with you to develop an investment strategy that works for you during these uncertain times and in the future.
We can get to know you and your current financial circumstances, goals, risk tolerance and personal values. We use all of this to develop a personalized financial plan including an investment strategy that works for you.
We also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.
Are you ready to talk to a professional about investing in 2020? Contact ProVise today to schedule a complimentary consultation.