Smart Investing Principles

Whether we’re in the throes of a recession or not, it’s always wise to keep up smart investing principles—it’s the best way to grow wealth over the long term, after all. In addition to staying invested, keeping your portfolio diversified, and reinvesting dividends (which Acorns does for you), try and keep your timeline in mind.

Keep a long-term perspective

If you’re a long way out from retirement, market turbulence in the short term shouldn’t cause you too much stress. History shows that they’re perfectly normal parts of the economic cycle, and things tend to bounce back. After the Great Recession, it took roughly four years for the Dow Jones Industrial Average to eventually hit a new high. But here’s a little secret: long-term investors who stuck with it were the ones who were positioned to net the greatest gains.

Consider your goals

Your goals play a big part in your investing habits, as well. If you’re saving for your kids’ education, for example, a 529 plan is usually your best bet. And while a regular brokerage account is a great place to grow your wealth slowly to fund long-term goals, saving for retirement in a 401(k) and/or Traditional or Roth IRA will open up tax breaks you can’t find anywhere else.

When all is said and done, a recession shouldn’t really affect your long-term investing plan all that much. The trick is to keep your emotions in check and, if possible, invest even more during market downturns. A well-thought-out investment plan is one that’s built to withstand market volatility and slumps, which is an inherent part of investing.

Investing involves risk, including loss of principal. Past performance does not guarantee or indicate future results. This information is being provided for informational purposes only, and is not intended to provide, and should not be relied on, for accounting, legal or tax advice. You should consult your tax or legal adviser regarding such matters.

(This article written by: Marianne Hayes)

Comments are closed.