If you’re looking to pad out your retirement portfolio or diversify your assets, you would be forgiven for wanting to steer clear of the stock market right now.
The past few months have been a roller coaster ride across all of the major exchanges, with once-strong companies seeing their share prices collapse as others have seen their stock inexplicably rise. However, one of the worst sins an investor can make is to hold off completely when the market is down.
As the famed investor Warren Buffet once said, “Be fearful when others are greedy, be greedy when others are fearful”. A market downturn might signify short-term losses for your portfolio, but that shouldn’t stop you from pursuing long-term gains. Here are the top reasons why now is truly the best time to invest in stocks.
1. Patience is a Virtue
While the market has had its fair share of peaks and troughs over the years, one thing that holds true is that, historically, stocks go up and up. Let’s take a look at the FTSE 100 Index, for example. If you had invested in the index 30 years ago, that investment would have seen returns of more than 600% by now. This is in spite of multiple market crashes, including Black Monday and the 2007-08 crash. The same can be said of virtually any other major stock index. No matter what happens in the short-term, the long-term direction is always up.
2. Investing in Stocks Has Never Been Easier
It perhaps made more sense to defer from investing in stocks before the advent of the internet, when one had to dedicate substantial amounts of time to finding a broker and communicating with them over the phone whenever you were ready to make an investment decision. However, those days are long gone. With the best UK stock brokers on learn bonds, investing in stocks has never been easier. All one needs to do is find the right online brokerage platform for them and immediately begin buying and selling stocks of their choice. When you can literally invest in almost any stock in seconds, there is no excuse.
3. Cash is Not an Asset
In times of turmoil, many people make the mistake of retreating into their cash assets, liquidating stock, and other commodities when a downturn begins. However, this is an error. As a result of the recent turmoil, we are now sitting on more cash than ever before. In an era of record-low and even negative interest rates, holding onto cash is equivalent to burning money. While stocks might go up and down, there is virtually zero chance of increasing your wealth if you simply decide to keep all of your wealth in cash. Combined with inflation, it is a fact that your cash is constantly losing its value over time, which is why it is better off being put into stocks.
These simple economic realities should illustrate why now is a good time to invest in stocks. As long as you have a diverse portfolio and look out for companies with real long-term growth potential, you will be strengthening your financial position for the long-term.