The market is thriving. Have you missed the best time to invest?
After a rough couple of years, the stock market is finally surging again. The S&P 500 (^GSPC -0.29%) has been reaching new heights, soaring by a whopping 41% from its lowest point in October 2022.
This can be an exciting time for investors, many of whom have watched their portfolios plummet in value over the past several years. But if you've been hesitant to jump back into the stock market, it may seem like you've already missed the best opportunity to buy.
But is the best of the recovery period really already behind us? Or should you still invest now? Here's everything you need to know.
Is right now a good time to invest?
There's good and bad news about the future of the stock market. The bad news is that the market's short-term performance is unpredictable, and even the experts can't say for certain where stock prices will be weeks or months from now.
The good news, though, is that over the long term, the market is far more consistent. Throughout its history, the market has not only recovered from every single recession, crash, and bear market it has ever faced, but it's also experienced positive long-term returns.
For example, over the past two decades alone, the market has surged by nearly 244%. Even if you hadn't invested during its lowest periods, you still could have earned a substantial amount of money by simply getting in the market at any point and staying invested.
^SPX data by YCharts
The key, then, is to keep a long-term outlook and get started investing as soon as possible. The longer you wait, the less you may earn over the long haul.
What if the market is about to dip?
Another common concern among investors right now is that this surge is only a temporary rally and that stock prices are about to fall. While it's unclear where the market is headed in the short term, even if a downturn is on the horizon, that shouldn't deter you from investing.
For instance, say you had invested in an S&P 500 index fund in February 2020 -- just weeks before the market would experience one of its fastest crashes in history. At the time, that may have seemed like the worst possible moment to buy. But by today, you'd have earned total returns of nearly 57%.
^SPX data by YCharts
Or, say you invested in an S&P 500 index fund in January 2008. The market was just starting its descent heading into the Great Recession, which wouldn't officially end until mid-2009. Still, though, by simply staying in the market, you'd have earned total returns of 244% by today.
^SPX data by YCharts
In other words, as long as you keep a long-term outlook, it doesn't necessarily matter when you buy. The market has consistently climbed over time, and by waiting for the "perfect" moment to invest, you're missing out on valuable time to let your money grow.
The key to keeping your money safer
Regardless of when you choose to invest, it's critical to ensure you're choosing the right investments. Not all stocks will experience long-term growth, and shaky companies may have a tough time recovering from market downturns.
The companies with the strongest fundamentals (which include everything from healthy financials to a knowledgeable leadership team to a competitive advantage) are the most likely to thrive over time. By filling your portfolio with these types of stocks, you stand the best chance of surviving whatever downturns may come your way.
Nobody knows for certain what the market will do in the near future, but with the right strategy, there's never necessarily a bad time to invest. By choosing the right investments and keeping a long-term outlook, you can set yourself up for substantial earnings over time.
Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
FAQs
There are no set ages to get into or to get out of the stock market. While older clients may want to reduce their investing risk as they age, this doesn't necessarily mean they should be totally out of the stock market.
Is the S&P 500 recovering? ›
The S&P 500 (SNPINDEX: ^GSPC) has been reaching new heights, soaring by a whopping 41% from its lowest point in October 2022. This can be an exciting time for investors, many of whom have watched their portfolios plummet in value over the past several years.
What is the average return on Motley Fool stock advisor? ›
Since launching in 2002, the Motley Fool Stock Advisor has delivered an average stock return of 644%*, significantly outperforming the S&P 500's 149% return in the same timeframe.
What to do when you lose all your money in the stock market? ›
Write it off. The silver lining of any investment loss is the ability to use it to offset capital gains (or offset ordinary income, up to $3,000 per year). Not only is it a tax-smart strategy, but also knowing that you leveraged a loss to save on taxes can provide some consolation as well as boost morale.
How much should a 70 year old have in the stock market? ›
If you're 70, you should keep 30% of your portfolio in stocks. However, with Americans living longer and longer, many financial planners are now recommending that the rule should be closer to 110 or 120 minus your age.
How much should a 60 year old have in stocks? ›
For years, a commonly cited rule of thumb has helped simplify asset allocation. According to this principle, individuals should hold a percentage of stocks equal to 100 minus their age. So, for a typical 60-year-old, 40% of the portfolio should be equities.
What is the stock market outlook for 2024? ›
Wall Street analysts' consensus estimates predict 3.6% earnings growth and 3.5% revenue growth for S&P 500 companies in the first quarter. Analysts project full-year S&P 500 earnings growth of 11.0% in 2024, but analysts are more optimistic about some market sectors than others.
Where will S and P be in 5 years? ›
They point to the fact that the US economy is expected to grow at a slower pace in the coming years and that interest rates are likely to rise. As a result, they expect the S&P 500 to grow by an average of 5-7% per year over the next five years.
What is the expected return of the stock market in the next 10 years? ›
U.S. stock returns: 2023 optimism carries forward
This heightened optimism is on par with the positive outlook in December 2021, when investors anticipated a 6% stock market return for 2022. Investor expectations for stock returns over the long run (defined as the next 10 years) rose slightly to 7.2%.
What is The Motley Fool's top 10 picks? ›
The Motley Fool has positions in and recommends Alphabet, Amazon, Chewy, Fiverr International, Fortinet, Nvidia, PayPal, Salesforce, and Uber Technologies.
Motley Fool Stock Picking Performance
But do their stock picks actually deliver? According to Motley Fool, their Stock Advisor recommendations have averaged returns of 584% since 2002, compared to the S&P 500's return of 114% in the same period. That's over 5x the market's performance.
What are Motley Fool's double down stocks? ›
Adding to winning stocks can amplify gains. The Motley Fool advises holding onto winning stocks, as they often continue to outperform in the long run. "Double down buy alerts" from The Motley Fool signal strong confidence in a stock, urging investors to increase their holdings.
Is it possible to lose all your money in the stock market? ›
A drop in price to zero means the investor loses his or her entire investment: a return of -100%. To summarize, yes, a stock can lose its entire value.
What happens if you lose 100% of your stock? ›
When a stock's price falls to zero, a shareholder's holdings in this stock become worthless. Major stock exchanges actually delist shares once they fall below specific price values.
Why do 90% of people lose money in the stock market? ›
Having little or no patience
This bias often causees us jump to conclusions, make impulse decisions, and constantly change our strategy. Ultimately, many people lose money in the stock market because they simply can't wait long enough for meaningful profits to arrive.
Should a 65 year old be in the stock market? ›
Near and current retirees are often encouraged to invest their money so it's able to grow. If you're 65, it means you may want to keep a notable portion of your portfolio in safer assets. It can still make a lot of sense for a 65-year-old to own stocks.
How much should a 40 year old have in stocks? ›
According to the rule of 100, 40-year-olds should allocate 60% of their savings to equity investments. That means the median earner would keep $101,400 of their $169,000 nest egg in stocks at age 40, with the rest held in safer and more liquid bonds and cash.
How much should a 30 year old have in stocks? ›
But with 30 or so years before retirement, you, too, are young. This enables you to take on investment risk, deploying most of your long-term savings — 70% to 80%, at this age — in stocks and stock mutual funds.
Should an 80 year old be in the stock market? ›
At age 70 to 79, consider a moderately conservative portfolio with 40% in stocks. At age 80 and above, be conservative and limit your stock holdings to 20%.
