Is it safe to invest new money in the stock market today? It's hard to say, if you're trying to decide based on its recent returns: The stock market, as measured by the S&P 500 index of 500 of America's biggest companies, was recently up by  around 14% year to date -- after having dropped about 18% in 2022.

You might also be wondering whether you should go ahead or hold back because of various things that might happen: Will China invade Taiwan -- an action that would disrupt much of the global economy? Will another pandemic usher in another period of economic struggles and supply chain constraints? There are always risks to consider.

There's arguably a much better question to ask, though, than whether it's safe to invest in the stock market right now. Instead, ask yourself: Am I ready to invest?

Someone is standing against a wall and smiling.

Image source: Getty Images.

Am I ready to invest?

It might be a perfect time to invest, but you shouldn't do so until you're ready. Here are some key signs that you're ready:

  • You've paid off any high-interest-rate debt you're carrying, such as balances on high-rate credit cards. Paying off such debts can free your future dollars for investing. Failing to do so can mean that you're paying as much as 25% per year or more in interest while earning half as much or less from your stock investments.
  • You have an emergency fund that holds enough money to support you for at least three months. (You never know when you might suddenly lose your job, face a costly medical situation, or need to pay for a new transmission.)
  • You have a long-term focus for the money you're investing. The stock market is volatile, after all, and you don't want to put yourself in a situation where near-term financial needs might leave you compelled to sell stocks when they're down.
  • You have read and learned enough about investing that you have a strategy you plan to follow -- such as value investing.
  • You have read and learned enough about investing that you're aware of common blunders to avoid -- such as day trading, investing in penny stocks, and using margin.

If reading and learning a lot about investing sounds like too much work, or you just don't have the time or interest for it, know that you have an excellent alternative to buying individual stocks: low-fee index funds. If you regularly plunk money into a broad-market index fund that returns an average annual gain of, say, 8% over many years, here's how your money might grow:

Growing at 8% for

$7,500 Invested Annually

$15,000 Invested Annually

5 years

$47,519

$95,039

10 years

$117,341

$234,682

15 years

$219,932

$439,864

20 years

$370,672

$741,344

25 years

$592,158

$1,184,316

30 years

$917,594

$1,835,188

35 years

$1,395,766

$2,791,532

40 years

$2,098,358

$4,196,716

Calculations by author.

Once you're ready to invest, there are few bad times to do so. It's generally best to just jump in and invest, as long as you're doing so for the long term and with appropriate expectations. Indeed, putting off investing can be quite costly.

What about those global risks?

Still, you might be wondering about global risks. They're there. But they've always been there. Market crashes, corrections, and recessions happen now and then, and they can derail the ongoing growth of your portfolio. But over more than a century, the U.S. stock market has always recovered from its down periods and gone on to hit new highs.

So protect yourself by being a long-term investor, ready to hang on through downturns. Spread your money across a range of companies, too, to avoid suffering inordinately if one of your major holdings implodes. (Our Foolish Investing Philosophy suggests owning at least 25 stocks and planning to hold them for at least five years.) If the idea of investing in foreign-based companies scares you, know that you can gain some exposure to international markets just by investing in big, U.S.-based companies that do a lot of business abroad.

If you're trying to time your investing optimally, and are trying to figure out what the market will do next, stop. No one can consistently and correctly predict the market's short-term movements. Instead, once you're ready, just start investing and keep adding money to your portfolio of stocks (and/or index funds) over many years. That way, you'll be investing in good times and bad, and will participate in the overall long-term growth of the stock market.