MONEY HACKS: Does It Make Sense to Start Investing When the Market Is Down?

Entering the final quarter of 2022, it’s obvious we have had a rough and “bumpy” year in the financial markets. We’ve experienced a measured sell-off and bear market, in both stocks and bonds, making investors and retirement savers worried, uneasy, and on edge about what is the best move for their financial picture.

One of the questions we’ve been asked during many of our one-on-one financial coaching sessions is “should I keep putting money in my 401(k) given the markets are crazy right now?” In this Money Hacks episode, I’ll answer this question and tell you a few upsides to a market downturn.

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Video Transcript:

Hey, this is Alex Assaley and it’s episode number 97 of Money Hacks. And as we enter into the fourth quarter of 2022, it’s been quite a bumpy ride, in fact, a pretty serious sell-off and bear market, in the stock market, and in the bond market this year is making investors and retirement savers quite nervous, anxious and to some degree jittery about what makes the most sense.

And so, one of the questions we’ve been getting a lot in our one-on-one financial coaching sessions is whether it makes sense for new investors or those who maybe are just getting going to actually start yet- “Should I put money in my 401k yet, given the markets are crazy right now and even if the markets have gone down a bunch?” And then we get a lot of questions from longstanding investors and savers as to whether it makes sense to keep putting money in their 401k or their other investment accounts, or if they should stop for a little bit of time and let the markets shake out and recover.

And while certainly this period has tested our emotions, and tested our fortitude in terms of staying invested in the markets, we don’t want investors to make short-term emotional decisions based on how painful this period has been. Instead, we want you to focus on the long term and while when it comes to your overall investment mix, you want to make sure it’s right based upon your age, time horizon, and your overall risk, comfort, and adjust. I could not be more emphatic in stating how important it is to keep saving, in your 401k, 403b, or other accounts, if you have the budget, and the financial wherewithal to do so. So, just because the markets are down it’s not a good reason to stop saving or to delay starting.

In fact, for those with a longer time horizon, this is actually a great opportunity to buy investments, those funds that you’re putting your money into in your 401k or other accounts while the prices are down, probably 20% or more from where they were about a year ago. So, you’re getting the ability to buy more shares when the markets are down.

Now obviously we can’t predict where the markets go over the course of the next week, month, six months, or year. Hopefully, we’re entering into a period where we’re kind of bottoming out in this bear market, in this downturn, but we’ll know a few years from now when that bottom was or is. But with that said, it certainly makes students to continue investing.

If you have other questions or if you’re trying to figure out your specific strategy, please connect with us on social, ask questions to this video, or reach out. Thanks! See you next time.