Follow an Investment Strategy Based on Your Needs, Not Market Conditions.
Should you invest when the market is down? Yes. You should also invest when the market is up. And don’t forget to invest when it holds steady as well. Noticing a theme? Investing is a great idea, no matter when you do it. Let your money work for you — instead of the other way around. Whether you focus on simple retirement accounts or aggressive mutual fund portfolios, investing for the future is smart. Leveraging the power of compound interest is a powerful way to build a stable financial foundation.
After answering questions about what investment products to use, many advisors wind up answering questions about when to invest. Bull markets. Bear markets. Up. Down. At the end of the day, most financial experts agree that investing makes sense no matter when you do it. However, due to natural market cycles, it’s essential to remember that successful investing requires patience and a smart long-term strategy.
Market Volatility: Don’t let a down market scare you off.
When you’re developing your personal investment strategy, it’s important to remember that market downturns are normal, expected even. But depending on who you ask, you might hear drastically different opinions on whether or not it’s wise to continue investing when the market dips.
One school of thought advises against “throwing good money after bad.” That adage makes for a quotable quip, but what does it really mean? Usually offered as a warning, this saying cautions against spending extra money to address an unfixable problem or recoup frustrating losses. In the down market scenario, this could mean doubling down on riskier investments to try to make up for temporary losses in others. For those who want to play it safe, the best course of action appears to be slowing investment activity and riding out the drop.
Of course, there’s also a contrasting view built around the idea of “buy low, sell high.” When the market falls, your portfolio may drop, but so do stock prices. For those who see the proverbial glass as half full, this can look like an outstanding opportunity to snag some shares at bargain prices. That’s certainly possible. But there’s always the chance that a plummeting stock may be falling for a reason. If a single stock is dropping but the wider market remains steady, it may be a good idea to resist buying more of that stock. The suddenly reduced price may not be the bargain it appears to be. While there’s certainly money to be made by investing during a down market, this strategy requires additional research and a healthy dose of caution. As a general rule, it’s safer to double down and invest when the market as a whole is down instead of trying to snatch up individual stocks that are bottoming out.
Down markets offer a unique blend of risk and reward. But as any savvy investor will tell you, market conditions should not dictate investment strategy. A bear market is no time to make hasty investments or spend money you hadn’t planned on investing. But then again, neither is a bull market. A sound, long-term investment strategy that’s built to weather the effects of change regardless of market volatility involves several basic steps: set your goals, minimize your costs, establish your risk tolerance, diversify your investments, and invest consistently.
Make Spero part of your investment strategy.
It can be tempting to find your favorite investment product and put all your savings into something you understand. Unfortunately, this is a real-world example of putting “all your eggs in one basket.” If you invest all your money in stocks and the market takes a dive, your losses could be devastating. The same goes for bonds, investment funds, annuities, and other investment vehicles. You want to be sure to have enough savings across multiple products to offset short-term losses or plateaus in a single investment. Diversification is essential for the stability of any investment portfolio.
As a full-service credit union, Spero offers several saving programs specifically designed to help you create a well-rounded investment portfolio that provides the financial security you deserve. When you’re looking for secure savings that offer attractive rates, consider the three following options:
Standard Term Share CertificatesOur fixed-rate term share accounts allow you to earn higher rates than regular savings accounts and offer personalized flexibility to fit your financial goals. Choose certificate terms ranging from 6 to 48 months, start with an investment as little as $500, and earn dividends on a quarterly basis.
Save-To-Win Share CertificatesSpero recently launched an innovative savings incentive program, the first of its kind in the state of South Carolina. When you open a Save-To-Win 12-month Term Share Certificate for as little as $25, you’ll be entered into a drawing to win a $25 monthly prize or a quarterly prize ranging from $500 to $5,000! Not only do you earn the standard rate of a 12-month Term Share Certificate, but you also get the chance to win more than your initial investment! This add-on share certificate also allows investors to deposit as little as $25 each month, earning an additional entry in the quarterly drawing for each deposit.
Individual Retirement Accounts (IRAs)While IRAs and Roth IRAs offer distinctly different tax advantages, both allow you to invest money for retirement and earn substantial savings over time. When you open an IRA, it is your personal account, which means you can determine your own investment strategy. Whatever your retirement goals may be, Spero IRAs are a powerful tool to help you achieve them.
Whether you’re a seasoned investor looking to diversify your portfolio a little further or an investment rookie who’s looking to start investing for the first time, Spero is ready to help you. We may look like a bank and offer similar services, but as a not-for-profit financial cooperative, we don’t make decisions based on what’s best for stockholders — we make decisions based on what’s best for you, our members. It doesn’t matter if the market is up, down, or somewhere in between, when you’re ready to invest, contact one of our financial representatives by phone or visit one of our convenient branch locations.
