15 Reasons to Stay Invested in the Stock Market Right Now

There’s no getting around it -- it’s been a bumpy time for investors lately. With concerns about rampant inflation, a tenuous geopolitical situation, and lingering volatility from the pandemic impacting stocks across a range of industries and risk pr ofiles, you’re not alone if you’ve seen your portfolio in the red more often than not lately. With the S&P 500 trading down year to date, you might be asking yourself whether it’s time to cut your losses and go home.

But that could be a massive mistake. Here’s why it’s more important than ever to stay invested in the stock market right now.

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Admittedly, if you look at the S&P 500’s performance over the past six months, it’s delivered a total return of less than 1%. But, over the past decade, the S&P 500’s total return is more than -- wait for it -- 280%. That’s an annualized return of more than 14%. That 10-year period certainly wasn't without its share of volatility, but investors who stayed in the market throughout it despite the ups and downs remained poised to rake in stellar returns and enjoy the fruits of their patience.

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Have cash to spare that you won’t need over the next three to five years? Right now could be the ideal time to put that cash into some great stocks while the market is still down.

Trying to time the market's dips and peaks as a means of generating investment wealth is risky business, and it’s really not much better than gambling. The pressure of trying to time the market right, coupled with the reality that your chances of timing it correctly are quite slim, creates an investing experience fraught with unnecessary risk and complications. On the flip side, when you add to your portfolio regularly regardless of the market environment, you can maintain a simple, stable investment strategy that sets you up for durable and more consistent returns.

ALSO READ: Should I Buy Stock Now or Wait?

The reality is that there is no such thing as a risk-free endeavor, and investing is no exception. That said, as investors, we can certainly mitigate the level of risk in our portfolio by the stock and industries that we put our money toward. If you find that your portfolio is in need of rebalancing, right now could be an excellent time to invest in more value-oriented and blue chip stocks to act as counterweights in to your more high-volatility investments.

This isn’t a new investing concept, but adding additional capital to your winning stocks right now can prime you for more stable, long-term portfolio returns in the future. At the same time, if your investment thesis about a stock has fundamentally changed due to overarching long-term factors -- not short-term headwinds such as a price drop -- it may be time to consider whether there are areas in your portfolio that need trimming.

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Presented by Motley Fool Stock Advisor
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Probably one of the biggest misconceptions of all that investors have during volatile markets is the idea that they need to take a certain decisive action. The reality is that, in many cases during bumpy market periods, the best thing to do is nothing at all. There's no shame in leaving your portfolio alone for a period and waiting to buy more stocks until a later date, especially if you feel emotions running high.

ALSO READ: 3 Ways to Cope With Stock Market Volatility

It’s only human to have a visceral response when you see shares of your favorite stock plunge by single or double digits in a day. The trouble is, if you make a rash investing decision in the heat of the moment, you could run the risk of failing to realize more optimal returns in the future, not to mention potentially losing money by selling at a weak moment in the market.

While past returns don’t bear promise of future returns, investors who have followed the history of the stock market over the past decades have learned an important lesson -- the market is cyclical. It experiences regular dips, but every time it has come back and generated even higher returns than before the dip occurred.

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Remember when we talked about how often the best thing to do during volatile market periods is absolutely nothing? This rings especially true if you don’t have the cash on hand to invest in more stocks right now.

You should never be using cash that you think you’ll need to dip into in the next few years. Why? Well, if you dip into your emergency fund to buy more stocks, and you find that you need that cash again in the near future, you may have to sell those stocks at an inopportune time in the market, not only losing money but potentially forfeiting future returns.

There’s no debating that seeing those intraday dips in your portfolio, especially of the kind investors have been experiencing lately, can produce a definitive emotional response.

The trouble is, if you hit the sell button on your volatility-hit stocks, you turn temporary downward movements in your portfolio into actual, palpable losses. Making a concerted decision to stay invested in the market during periods of extreme volatility like we’ve been seeing lately is key to building a robust long-term investment portfolio, and that rings truer than ever in the current market environment.

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Presented by Motley Fool Stock Advisor
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You know how many times the market has failed to recover from a correction or crash? Zero. That’s right. Every single time, the market has come back, and stronger than ever.

Now, it’s important to note that the precipitous market crash of 2020 and its blisteringly fast recovery was a bit unusual compared with previous downturns. Historically, market recoveries can take anywhere from a few months to a few years after a downturn. The good news is, even a market downturn can present plenty of attractive opportunities for patient investors to buy more great companies.

ALSO READ: Stock Market Crash: 3 Warren Buffett Stocks Down 15% to 90% to Buy Now

Just as the reality that staying invested and continuing to buy stocks in all phases of the market cycle amplifies your ability to experience generous, long-term portfolio returns, there’s no getting around the fact that market declines can and will happen. In fact, on average, a market correction occurs once every two years. You can’t avoid this reality of investing, but you can plan for it by maintaining a forward-looking mindset and continuing to add more quality stocks to your portfolio.

With very few exceptions, a price decline in a stock is rarely a good reason to hit the sell button. And selling shares of a quality business based on temporary factors could not only throw off the balance of your portfolio but also prevent you from realizing great future returns.

ALSO READ: How Will a Market Crash Affect Your Retirement?

Thinking about investing but unsure whether right now is a great time to be getting into the markets? The truth is, it’s always a good time to be a long-term investor, and even a small amount of investment capital added to your investment portfolio on a regular basis will reap far better returns than trying to predict the market’s movements ever will.

The truth is, long-term investing doesn’t need to be complicated. A stock’s price doesn’t necessarily indicate the quality of the business, for either good or bad.

Trying to predict when the market will peak next as a means of deciding when to invest offers a very low chance of success. Likewise, attempting to forecast when the market will bottom out as a metric for trying to buy great stocks at the cheapest possible valuation also brings with it a very slim chance of success.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

There’s a famous quote by Charlier Munger that goes, “The big money is not in the buying or selling, but in the waiting.” For long-term investors viewing the current market volatility with mixed reactions, this quote is especially poignant. The market conditions impacting the current bout of volatility are temporary, but the decisions you make now about your portfolio could have a lasting and durable impact.

And when you buy a company with the intention of holding it for five to 10 years or even longer, share price movements during a few days, weeks, or even months are just a brief window of time in the life span of that stock as an investment.

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