Should I Invest in the Stock Market Now?: 4 Key Factors to Consider

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More and more young people are getting into the world of trading stocks. Stocks are investments in your future as long as they go the way you plan, but is stock market investing the right choice right now? 

You might have seen all of the success stories on websites like Reddit where people are exponentially increasing their funds over a good stock market investment. You probably thought to yourself “Should I invest in the stock market now?”, and maybe you should, but don’t be so quick to hop on the stock trading game.

You’re working with real money that can increase or decrease at the drop of a hat. It takes one bad deal to lose it all in the stock market.

Keep reading to learn a few factors you can look into to see if now is the best time to start trading stocks.

1. Market Volatility 

Investors and potential investors have seen the volatile stock market and watched with unease as it rose and dropped over and over. 

This has a lot to do with our current situation with COVID-19 and concerns about the economy failing due to an inability for companies to stay open or increase their profits. Any large-scale news about the economy or politics overall will cause some instability. 

Some companies seem as though they’re immune to the routine ups and downs of the stock market, but everyone suffered a hit in March. 

When you’re thinking about buying stocks take a look at the current state of the market. A stock might seem good now but if it’s been experiencing frequent highs and lows it might be a good idea to wait.

You might buy at what you think is a low point just for it to go lower, or buy at a high point thinking it will rise more when it was actually an unsustainable price. 

Checking out the NASDAQ composite is a good way to get an overview of what the stock market is looking like right now.

Consistent growth? You’re probably safe. Ups and downs? Maybe wait it out. 

What all aspiring and experienced investors can agree on is that it helps to have the right trading app. Read this robinhood review to learn more about which online brokerage company is right for your investing needs.

Bonus Tip: Industry Specifics

Certain industries are suffering more in the current economic situation while others have been thriving. It can be tempting to buy stocks in the floundering transportation industry as it goes through highs and lows, but if those businesses fail overall you won’t be making money on them. They’re risky. 

Other industries, like tech and videogaming, have been on the rise short of the brief hit that March gave them. They might not be at their lows, but the highs and lows are more consistent so they might be a better choice in a volatile market.

2. Highs and Lows In the Long Term

So does market volatility matter most when it comes to buying your stock?

If you’re planning on day trading, the quick highs and lows from a volatile market can be a good indicator of your stocks.  When you’re trying to gain more money over time, or at least over the course of a month or so, this might not be the case. 

For this, you want to check the highs and lows that the companies have encountered over time. 

There are companies that have had a slow but steady incline as years have gone on. These ones are great to invest in as long as you don’t expect instant results. They will go through regular peaks and valleys but they won’t be subject to the volatility present in smaller and less reliable stocks. 

If a company has remained at nearly the same value or even dropped, this isn’t the time to invest in them. Even if they’re at a low point right now you can’t guarantee that they’ll ever rise back to their full potential or give you enough of a return to be worth it. 

You can check the stock price history of most companies on your favorite websites or apps for online stocks

3. Your Age and Intentions

A volatile market isn’t a great time to invest for everyone. While it can have spectacular lows and highs that offer a huge payoff, it can also have disappointing drops that can make you lose money before you’re able to withdraw it. 

When you’re young, these drops aren’t as big of a deal when you know that the market’s long-term outlook is good. Investing early is always a good idea. Many people say that the best time to invest is yesterday and the second-best time is today. For young people, this is true even in a volatile market. 

If you’re older and looking to put money into your retirement, or if you don’t want to stay in the market long-term, this might not be good advice. 

Someone who plans on keeping money in the market for five or more years can invest now without much worry. Someone who plans on taking money out earlier than that, or day trading, might have more to think about. 

4. Your Financial Stability

Investing is so popular right now that you might be jumping on the bandwagon. Not everyone has the spare money to invest in the stock market, though, and it could lead you to financial instability instead of the residual income that you were hoping for.

Most stocks won’t make you wealthy overnight (though there are outliers). You shouldn’t invest more per week than you’re willing to lose, and for some people, that means that they shouldn’t invest anything. 

If your finances are tight enough that throwing a few dollars at the stock market every so often makes you nervous, reconsider whether or not you’re in a space to do so.

Should I Invest In The Stock Market Now? It Depends

Our economy is a little bit rocky right now but the appealing lows of the market can tempt people to buy anyway. “So,” you might be thinking, “should I invest in the stock market now?” to buy low and sell high in the coming years after a recovery.

If your finances are stable,  you’re able to hold stocks for the long run, and you’re paying attention to market volatility and stock history, this might be the best time for you to invest.

Pay attention to the news and learn what to look for to anticipate a stock market crash. Good luck trading in the stock market and profiting! 

To learn more about investing, finances, and more, visit the rest of our site. We have a wide variety of articles about investing in stocks and preparing your investments for retirement in the Finance section of our site.