While recent global conditions have hit the economy severely, the stock market continues to ride high. As the world comes out of the COVID-19 pandemic, stocks continue to be a great investment.
The Speed of Money is Coming Back
The health of the economy is fundamentally tied to the speed of money as transactions occur. As many citizens have struggled under the pressure of the pandemic, they have turned from active consumers into hoarders of cash as well as toilet paper.
The economy is struggling because money isn’t moving. During this time of limited monetary movement, the stock market has taken a hit and many stocks areon sale and poised for growth.
If you’re not certain about buying into a particular company at this time, check out index funds. The largest and most well-known stock index is the Dow Jones. It’s important to note that the Dow Jones focuses on large companies.
Your index fund purchase choice could be tied to many factors in the economy. For example, you might want to invest in oil and gas as families take their vacation time and hit the road as the pandemic wanes.
While stock dollars grow slowly, the art of Forex trading can actually turn into a steadier form of income. However, you will need some strong skills to trade currencies successfully and turn your trades into a steady payout.
Consider a Forex trading course to prepare properly. Once you’re trained, this investment into your skills can turn into a real career.
The Ghost of 2008
The crash of 2008 hit a lot of investors, particularly baby boomers, in the pocketbook. Anyone who planned to retire in the decade following 2010 may only have done so under duress. However, the causes of 2008 appear to be, if not contained, at least fenced in.
This is not to say that you shouldn’t honor your tolerance for financial risk. If the money in the stock market has you in a panic and checking your dollars all the time, maybe you would be happier with it under your mattress.
Park it in a fund that is low in volatility but has a solid history of slow returns and forget about it. Check it on your birthday if you like, but that’s the only day of the year you get to study your balance. Don’t panic.
Panic is expensive. A big part of the crash of 2008 was that funds that were supposed to behave in certain ways
- weren’t what they promised
- didn’t function as designed, and
- were completely unpredictable, so
- panic hit the markets and many people put their investment dollars under the proverbial mattress
While the spending limitations that were put in place following the crash of 2008 have hit a lot of younger workers on the financial chin, such as anyone trying to pay student loan debt while saving for a house, current tightness in the housing market indicates that buyers haven’t given up and are still striving to get that down payment together.
Is the housing market comfortable for potential buyers? No, but a tight housing market is an indicator that dollars are moving and that sellers are moving up into new price ranges.
Bubbles Will Continue
There will always be speculators, no matter the market you’re interested in. If you’re interested in speculation, cryptocurrency, or any other volatile markets, go ahead and put some dollars aside for a bit of gambling.
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There are many people that have made and lost fortunes in speculatory markets. If you can’t afford to lose the money, don’t put it there.
Keep an eye on bubbles as they hit the news and look for somewhere a bit duller to put your money. By the time a bubble hits the news, the money to be made in it has already been harvested. You will be in the classic position of buying high with no space for your investment to go up in value.
Instead, think of investing as a game of base hits. Yes, you can hit a home run on occasion with one stock. However, having several stocks in your portfolio that are making a bit of money for you every day will be a much better risk as you age.
Stocks are going to continue to grow slowly over time. Regulations continue to be put in place to stop speculatory investments from creating destructive bubbles. Buy into stable funds, put money in your account on a regular basis, and let it grow over time.
Image Credit: learning about the stock market by twenty20.com
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