Should I keep investing or press pause?

The stock market is brutal right now, so it's understandable to crave hitting the pause button. But should you?

“Should we continue investing money now or possibly wait until the market starts to rise?”

Disclaimer: I don’t know you, your risk tolerance or your goals, so I’ll never tell you exactly what to invest in. This also shouldn’t be considered investing advice and yes, your investments are going to go up and down (probably more down right now…). 

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Quick Answer

Yes, you probably should keep investing!

The stock market has been rocking-and-rolling. We’re in what is called “a bear market.” The short definition: The market goes down for an extended period of time. It’s ugly, painful, and your investments on paper look like you’ve lost a lot of money. Spoiler: You haven’t unless you actually sell.

You’re going to see a lot of chatter to BUY, BUY, BUY!!!
Everything is on sale!!! 🔥🔥🔥

This isn’t wrong advice, but you need to stay the course on what is best for you and your overall financial goals and plan. Throwing a bunch of extra money into the market shouldn’t come at the cost of compromising your short-term goals.
It certainly shouldn’t come from your emergency savings. 

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Detailed Answer

When the market dips, that means you can buy shares at a lower rate, so you’re basically getting a deal. It’s part of the reason people recommend the dollar-cost averaging (DCA) strategy. The DCA strategy is to invest money each month to catch the market at different points. Sometimes it may be higher and other times it may be lower, but it’s presumed to average out to a deal. The other option is to invest a lump sum as soon as the money is available (e.g. an inheritance or tax refund or bonus). 

A lot of folks argue about which is better – but you can engage in both. Your retirement plan, for example, is likely DCA because you’re putting a chunk in from each paycheck instead of saving up to the end of the year to make a big contribution. However, you do come into lump sum you want to invest, then you could do it all at once instead of having to drip it in slowly.

But, back to “buying the dip.” 

Whether it’s a market correction, a recession, or just a tough day, whenever the market dips, you are essentially getting more bang for your buck if you buy. Of course, that’s under the assumption that whatever you buy will eventually go back up. Index funds and ETFs are a better play here than individual stock picking, because there is no guarantee that an individual stock is going to ride out turbulence. 

However, you should stay the course of your investing plan (assuming it’s based on your goals and risk tolerance). Which probably does mean, yes, of course, continue to invest.

What it doesn’t mean is mean to dump a bunch of money into the market that you otherwise would save towards other goals, especially if you have short-term needs or if you’re working on paying off high-interest debt. 

If your short-term goals (like having a healthy emergency fund) are already met and you want to put a little extra into the market, then that’s your call. It’s not necessarily a bad decision, but you also want to make sure you have plenty of money in savings in cash. You don’t want to have almost all of your money tied up in the market because you don’t want to have to sell in a down market either. 

You should continue contributing to your retirement plan every month like you normally would. If that’s the only way you’re currently investing, then that’s okay. You’re still taking advantage of the reduced price on stocks (assuming your money is actually invested and not just sitting in cash! Here is your reminder to check and ensure you actually picked investments when you set up your 401(k)/IRA.) 

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