The Danger of Investing in a Volatile Environment

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The past few years haven’t been kind to investors. If you’ve been burned by the market, you may think that now’s not the time to invest your money, especially with so many other people getting out of the market altogether in response to these setbacks. However, while there are definitely risks involved with investing in a volatile environment like this one, taking advantage of these volatile prices can be immensely profitable if you know what you’re doing. To learn more about how to successfully invest in an uncertain market, keep reading below.

Financial crashes are inevitable

it’s been that way for hundreds of years, and it’s not going to change. The only thing you can do to protect yourself is to have some form of protection when these crashes inevitably occur. Some investments are safe and are likely to weather any storm that comes, but they will typically give you low returns over time.

5 reasons why investing is dangerous right now

There is no doubt that we are living in an era of volatility. People are losing their jobs and people have lost a lot of money (and fear losing more). Markets all over the world are extremely volatile and people who invest their hard-earned dollars into stocks or other securities should be very cautious right now. This post will present five reasons why you should tread carefully before investing your money right now.

Investing when there’s no positive outlook

It’s no secret that Europe is currently experiencing an economic slump. What you may not know, however, is that European markets have been experiencing extremely low levels of volatility. It’s easy to assume that because an investment has done well over time, it will continue to do so—but while correlation is certainly a factor, there’s no guarantee your investments will perform as expected during volatile market conditions.

Invest only if you have a high-risk tolerance

This can’t be overstated. Generally, you should be investing only if you have high-risk tolerance, which means you’re prepared to lose your money and accept that possibility.

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Don’t focus on individual stocks; invest for the long term

In an increasingly volatile market, diversification is one way to take advantage of potential changes. One way to minimize risk and maximize your portfolio’s potential is by investing for as long as possible, rather than timing investments with market swings. For example, if you have $100,000 to invest over five years, you could put $20,000 into an S&P 500 index fund today; $20,000 into an international index fund; and $60,000 into a broad bond fund.

Long-term, buy and hold is still king

Stocks are on sale, and that means now is not a great time to start trading. If you invest for long-term gains (one to five years), you’ll see less fluctuation than if you invest for short-term gains (less than one year). Keeping your emotions out of investments will help you make better decisions, keeping your money growing instead of shrinking in value.