5 Tips for Investing in the Stock Market – During Difficult Times
Investing in the stock market, particularly in turbulent economic times like the one we face today, can be an emotionally draining experience. It’s easy to get caught up in the day-to-day wild swings of the market and lose your focus as an investor. It’s easy to give advice like “investing for the long term,” but the fact is that we live in the short term. What is happening today, this week, this month is vitally important to us. It’s natural to worry when we see things like the banking crisis, the real estate crash, and the price of oil above $100 a barrel. However, there are things that the individual investor can do to alleviate some of this financial market stress.
Expand your sources of information. Too often we get financial information by listening to the loudspeakers on television or reading the sometimes hysterical headlines in newspapers or on Internet news sites. Their goal is to grab your attention. Arousing emotions, even fear, is a standard way that the media increase readership and viewership. But there are also quiet sources of financial information available, such as monthly financial magazines and investment newsletters published by well-known market experts. It can be helpful to increase the number of perspectives we have access to. The more information we have, the more likely we are to make thoughtful investment decisions, rather than irrational ones.
Take a history lesson. The United States has faced economic challenges far worse than those we face today. Investing has always been about accepting risk and believing in the future. If we use history as a guide, it is clear that we will also get out of the current difficulties.
Be more conservative than usual in your asset allocation. Reducing your risk exposure can reduce the chances of sleepless nights. There are times when it makes sense to keep a higher percentage of your assets in cash. You may be sacrificing some potential for higher returns, but the peace of mind could be worth it.
Seek investment advice. Internet technology has allowed more investors to do their own stock research and trade online without having to deal with a traditional broker they would call on the phone. If trying to understand these turbulent markets has turned out to be more of a challenge than you expected, it may help to find a traditional financial advisor to help you. Going alone is not always the best way.
Talk to friends and colleagues. If you’re worried about your investments, you can be sure almost everyone else is too. It can be helpful to discuss your concerns with your friends or associates, particularly those older than you who may have been through cycles like this before. They may have information or past experiences that you will find helpful as you chart your path to prosperity. At the very least, you’ll feel better if you express your concerns.