Here's Why You Should Invest Even When the Market Is Down (2024)

A volatile stock market can be worrisome, especially for new investors. When the value of your portfolio has dropped, you may be unsure about continuing to put in more money. You might even want to cut bait and sell your investments entirely.

While this is a normal reaction to a down market, it's one that every investor needs to learn how to get past. Experienced investors know that it's important to continue investing when the market is down. In fact, it's one of the best money moves you can make.

Why you should invest when the market is down

Stocks, and the stock market as a whole, go through ups and downs. These are often due to the economy and not necessarily related to a stock's underlying value.

For example, during the Great Recession, stock prices dropped by about 50% between late 2007 and early 2009. That's a stressful situation for any investor. But many of those stocks were still quality investments that recovered and became even more valuable. The investors who buy during down periods are able to get a lower price, and eventually make even more money if the stock recovers.

Ramit Sethi, who stars in How to Get Rich on Netflix, recently shared a smart reason why you should continue to invest when the market is down. As he put it, "When the price of something you want goes're happy about it!" If a product you love went on sale, you'd probably take the opportunity to buy it at that lower price.

It works the same way with investing in stocks. If you believe a stock is a good long-term investment, you should invest in it regularly. If the price goes down, don't look at it as a bad thing. Look at it as an opportunity to get more for your money.

Even if it feels risky, the reality is that the most successful investors end up making money by investing during down markets. What you shouldn't do is stop investing. If you only invest when prices are going up, you'll make less money overall. And you definitely shouldn't panic sell your investments. Once you sell, you lock in your losses, and you'll miss out if those investments bounce back.

How to choose quality long-term investments

The key to making this work is to choose investments that you believe will be successful over the long haul. That way, you can continue to invest with confidence no matter what the market does.

Despite what some people believe, your investments don't need to be individual stocks that you pick yourself. They certainly can be, if you want to build your own portfolio. But there's also a much simpler option that can be just as effective -- investment funds. These put your money in a large number of stocks, bonds, or both, giving you a diverse portfolio in as little as one investment. Options include:

To give you a firsthand example, I've been investing in a total stock market mutual fund for years. It distributes my investment across the entire U.S. stock market. During the time I've invested in it, the price has fluctuated quite a bit.

No matter the price, I've put money in it every month. I know that historically, the stock market has produced an average annual return of about 10% (before inflation, that is). Even though nothing's guaranteed with investing, I'm reasonably confident that over the long term, the U.S. stock market will keep going up. So, when the market is down, I just look at it like I'm getting more for my money the next time I invest.

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Here's Why You Should Invest Even When the Market Is Down (2024)


Here's Why You Should Invest Even When the Market Is Down? ›

If the price goes down, don't look at it as a bad thing. Look at it as an opportunity to get more for your money. Even if it feels risky, the reality is that the most successful investors end up making money by investing during down markets.

Is it better to buy shares when the market is down? ›

If you're asking, "Is now a good time to buy a stock?" consider that it's always a good time to invest when you find a security you've determined is undervalued by the rest of the market. On the other hand, you'll likely find more opportunities to buy shares of undervalued companies during a broad market decline.

Should I keep investing when the market is bad? ›

Investing in stocks during or after a major market crash can be a good opportunity to buy stocks at a lower price, as stock prices often drop significantly during a market crash.

What is one thing never to do when the stock market goes down? ›

Panicking when your portfolio decreases drastically and selling is the worst thing to do. Avoid such a mistake by understanding how the market works and setting a personal risk tolerance. Experiment with a stock simulator to identify your tolerance for risk and insure against losses with diversification.

How to turn $5000 into $10000? ›

How can you make $5,000 turn into $10,000? Turning $5,000 into $10,000 involves investing in avenues with the potential for high returns, such as stocks, ETFs or real estate. Another approach is to use the money as seed capital for a profitable small business or side hustle.

Is it better to invest in stocks when they are low or high? ›

The best time to buy any stock is when the price is low. However, what you consider to be a low price will depend on how long you plan to hold the stock. If you're investing for the long term, the timing of your trade will likely matter much less because, historically, the market has risen consistently over time.

At what age should you get out of the stock market? ›

There are no set ages to get into or to get out of the stock market. While older clients may want to reduce their investing risk as they age, this doesn't necessarily mean they should be totally out of the stock market.

How much was $10,000 invested in the S&P 500 in 2000? ›

Think About This: $10,000 invested in the S&P 500 at the beginning of 2000 would have grown to $32,527 over 20 years — an average return of 6.07% per year.

Should I keep investing right now? ›

The key to long-term investing success

Time is your most valuable resource when building wealth in the stock market. So rather than waiting for the ideal time to invest, it's often better to buy now and hold your investments for the long term. Even if you invest at the "wrong" time, it can still pay off over time.

Is now a good time to invest in the stock market? ›

Stock prices have surged significantly over the past 18 months. The S&P 500 is up by 45% since it bottomed out in October 2022, while the tech-heavy Nasdaq has soared by a whopping 58% in that time. Investing now, then, means paying much higher prices than you would if you'd bought a year or two ago.

Where is your money safest during a recession? ›

Where to put money during a recession. Putting money in savings accounts, money market accounts, and CDs keeps your money safe in an FDIC-insured bank account (or NCUA-insured credit union account). Alternatively, invest in the stock market with a broker.

What stocks do well when the market goes down? ›

7 Stocks That Outperform in a Recession
StockImplied upside from Feb. 21 close
Accenture PLC (ACN)3.6%
T-Mobile US Inc. (TMUS)12.8%
Walt Disney Co. (DIS)11.5%
Netflix Inc. (NFLX)6.4%
3 more rows
Feb 22, 2024

Where does all the money go when the stock market goes down? ›

“In other words, the money did not exist or disappear for long-term investors if you did not make any transactions. However, for short-term investors, when stock prices go up or down, the money would be transferred among them as a zero-sum game, i.e. your losses would be others' gains, and vice versa.”

How can I double my $1000? ›

If your employer offers a dollar-for-dollar match contribution, you can double $1,000 by investing it in your 401(k). Other than that, there's no easy or risk-free way to double $1,000—you can invest the money in individual stocks, but there will be risks involved.

How can I double $5000 quickly? ›

5 ways that you can double your money
  1. Get a 401(k) match. Talk about the easiest money you've ever made! ...
  2. Invest in an S&P 500 index fund. An index fund based on the Standard & Poor's 500 index is one of the more attractive ways to double your money. ...
  3. Buy a home. ...
  4. Trade cryptocurrency. ...
  5. Trade options.
Nov 3, 2023

What is the best time to buy shares? ›

With all these factors taken into consideration, the best time of day to trade is 9:30 to 10:30 am. The stock market opens for trading at 9:15 AM and in the first 15 minutes, the market is still responding to the previous day's news with experienced traders waiting to make their move.

Do you buy stocks when they are red or green? ›

On many tickers, colors are also used to indicate how the stock is trading. Here is the color scheme most platforms use: Green indicates the stock is trading higher than the previous day's close. Red indicates the stock is trading lower than the previous day's close.

What should you do when stocks go down? ›

What to do during a stock market crash
  1. Know what you own — and why. A fear-driven reaction to a temporary slump isn't a good reason to dump an investment. ...
  2. Trust in diversification. ...
  3. Consider buying the dip. ...
  4. Think about getting a second opinion. ...
  5. Focus on the long term. ...
  6. Take advantage where you can.
Feb 16, 2024

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