On one hand, buying stocks (in mutual funds) is best when the price is low, not after it has been booming.
On the other hand, it is not for the faint hearted.
Yet, the interest rate for safe CD savings is so small you can't keep up with the inflation and the loss of purchasing power.
So what should those who can only invest a little do? Considering that retirement is quite far away, just take the risk?
I'm looking at things like commercial real estate. It has also been significantly down, even though the forclosure crisis did not affect it as much. Is it just consumer confidence? Is this a good time to buy it cheap? Will it go back up long-term? Almost definitely yes.
Should one invest now?
February 20th, 2008 at 08:39 pm
February 20th, 2008 at 08:50 pm 1203540649
February 20th, 2008 at 09:22 pm 1203542526
For long term (read retirement), I assume you have over 20 years until retirement and you should allocate on the aggressive side. Mostly in stocks growth, large and international. I also have a small (%5) allocation in REITs.
Now the rest of your investments depends upon the time horizons. Are you saving for a house in 2-5 years. In this case you would want to move into safer investments. Probably shorter term high quality bonds and some money market.
Is this for your emergency fund? Emergency funds should not be in stocks and only in money market accounts where you could get at the money.
I guess the things to keep in mind is that your total portfolio should be well diversified and the risks you take should take into account the time horizon of the investment and what that money will be used for.
February 20th, 2008 at 09:54 pm 1203544450
We do save for retirement, consistenly, I just don't know what steps would be wise to take now. I've been watching my investments loose money, and it is not easy. But rationally, maybe I should invest more in mutual funds when things are crappy. It is just scary to do because they are likely to get more crapy. But if I think that way, it becomes "time the market" issue, which I know is not rational.
February 20th, 2008 at 10:19 pm 1203545952
Don't think of it like you might miss the boat think of it as I can sleep tonight and not worry.
Come from a position of strength and you will fine.
February 20th, 2008 at 10:52 pm 1203547932
Short answer: Yes! Now is always a good time to invest. Now is better than later.
I know that it looks like we're all losing money, but please remember that, especially with long-term investments, it's only a paper loss. If you look at your NAVs, you'll see that you haven't actually lost anything at all. There's still plenty of time for the money to rebound and grow.