The stock market has been on a bumpy ride in recent months, and now that the coronavirus has officially caused a recession, many Americans worry that the market hasn't yet hit bottom. But despite the economic uncertainty surrounding the pandemic, there's one surefire recipe for boosting your investment account: Increase you contributions to it.
Bumping up the amount you put into the market may not top your to-do list during these turbulent times, but there are three reasons investing more money during this crisis could be the smartest move you'll make.
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1. You may have experienced losses during the market crash
The market has been volatile since COVID-19 closures started in mid-March, first crashing, then rallying, and now falling again. If your account fell in value during this time, you aren't alone. And while there's a good chance you'll recover over the long term if you have a diversified portfolio and own strong companies, that's not true for every investment.
If your investments don't ever fully recover, you can make up for your losses by putting more into the market. And you can learn from any mistakes you made that led to poorly performing investments, so you can do better this time around.
2. There could be good buying opportunities
Warren Buffett has offered lots of investing advice, but perhaps some of the most relevant during these troubled times is that "whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down."
Now that COVID-19 has caused a recession, there's a good chance that the market will fall further. There could be some great discounts on shares of strong companies that are poised to survive turbulent times and come out stronger in the end.
3. COVID-19 shows how quickly a good economy can turn bad
At the end of February, the U.S. economy was chugging along nicely, and few predicted the devastating impact COVID-19 would soon have. Since investors don't have a crystal ball, this wasn't the first time people were caught off guard, and it won't be the last.
But the more money you have invested, the more opportunities you have to diversify your assets and increase the likelihood at least some of your investments will do well even when everything is going wrong in the world. And while putting more money into the market means taking on more risk, you also have more of a cushion to absorb losses. If some of your investments underperform but you've invested more than enough to meet your financial goals, you'll be OK in the end.
Now is the time to invest more for your future
As you can see, there are good reasons to increase the amount you are investing to help you become financially secure. If you have your bills covered and some money saved for emergencies already, start putting your spare cash into the market ASAP. You'll be glad you did when you have a healthy account balance in the future.
