To invest during a recession, the right attitude is crucial
If there’s anything you should expect out of 2020, it’s volatility and unpleasant surprises — and that applies to the stock market, as well. Therefore, if you’re going to invest this year, be prepared for a wild ride. But also, prepare to take a step back and let things play out.
If you check up on your investments too frequently, you may be more likely to panic when you see several days of consecutive losses, and panic could lead you to do a very dangerous thing: selling off investments when they’re down.
One thing it’s so easy to forget in the course of investing is that you only lose money on stocks when you actually sell them at a price that’s less than what you paid for them. If you sit tight when your portfolio value plummets and wait things out, you can avoid losses completely.
To be fair, checking up on the market daily doesn’t automatically mean you’re going to do something foolish, like dump investments for no good reason. But the more frequently you look at your portfolio, the more likely you are to react.
A better bet, therefore, is to check up on your investments monthly rather than weekly. If you’re set on emergency savings and aren’t reliant on your investments to pay immediate bills (which you really shouldn’t be), then there’s no need to worry about whether your portfolio grew from day to day or took a hit.