The stock market has been incredibly volatile over the last couple of years, and it has caused many who are just beginning to plan for their retirement and those nearing retirement to avoid investing int the markets altogether. While for older couples nearing retirement, avoiding large amounts of investments in the stock markets is a wise decision because they have more to lose should their stocks not perform as well as expected. However, for young investors, investing in the stock market is a great decision because:
Time is On Your Side
Choosing to calculate your retirement at a young age is a great way to get on the right track for an early and comfortable retirement. However, having that kind of time on your side is also beneficial when investing in the stock markets. Stocks are highly volatile, but having the time needed to see great returns is highly beneficial. So if you are young and looking to invest, stocks are a great thing to invest in because they can achieve maturity and ride out the storm.
Keeping all of your money in a savings account is no way to save for retirement. The returns are incredibly low, as the interest is generally only a percent or barely over, and there really isn’t much you can do with a savings account to increase your returns. While they are highly secure, choosing to invest in the stock market while you are still young can provide you with high yielding investments which can speed up your retirement or make it that much more comfortable.
Diversifies Your Portfolio
If you want to have a successful retirement account, then you need to have an adequate portfolio that is well diversified. Adequately investing in stocks and bonds can provide you with the diverse portfolio needed to get the most out of your retirement account. While you are young, you should have 70 to 75 percent invested in stocks and the remaining amount in bonds. This will help keep your portfolio diverse and more secure while also allowing you to get the most out of every dollar you invest. When selecting stocks in which to invest, it is a good idea to keep an eye on the market trends, since the market is constantly changing. By analyzing these trends, you can better predict what the market will do in the future. Overall, this reduces your investment risk because you will be able to see what the market is likely to do in the coming weeks and can make adjustments to your portfolio accordingly. Trends investing allows you to combat market volatility and keep your investments heading in the right direction as you get closer to retirement
The economy in general is in a precarious situation which makes investors, both young and old, fairly wary. However, if you have money to save and are younger, then investing in the stock market is a great idea. Not only will it provide you with better returns, but it will also help stimulate the economy – which will only further stimulate your retirement account.
Post by Amanda