After seeing last week’s huge stock market drops, you may have wondered if you’re investing money the right way. Or you may still be on the sidelines, not sure how or when it will be a good time to get in the game.
I received a question from Sagar R. who says, “I have a unique situation. I’m 35 years old, from another country, and have never invested. I fear recession is around the corner every year and just put my money in the bank. How can people like me get started investing?”
Another question comes from an anonymous Money Girl Podcast listener who says, “I have about $50,000 sitting in a savings account. I haven’t put it in an IRA because I’ve been worried that I’ll need the money. But I’m also worried that I’ve waited too long to start investing because I’m in my 40s. How should I manage this money?”
In this post, I’ll answer these questions with recommendations for how to invest money wisely, even when the market is volatile. You’ll know exactly how much to invest and where to put your money so you create financial security without taking too much risk.
8 Investing Rules to Follow Even When the Stock Market Drops
- Clarify the purpose of your money.
- Know the difference between saving and investing.
- Start early and small.
- Don’t try to beat the market.
- Be diversified to cut risk.
- Focus only on what you can control.
- Use tax-advantaged accounts for faster results.
- Choose investments based on time horizon
Here’s what to know about each investing rule.
1. Clarify the purpose of your money.
There’s one rule of investing that you should always remember: Never expose money to more risk than is necessary to accomplish your goals. So, take a step back and be clear about why you’re investing in the first place. Determine when you’ll need to spend the money you plan to invest, because that determines what you should do with it.
Historically, a diversified stock...
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