There’s never a bad time to invest in your retirement, and a down economy is no exception. Unless you’re planning to retire soon, investing for the long term is almost always a smart move. Time is on your side, and you have a lot to gain!
Market fluctuations are normal—there will be up days and down days—so short term dips will have negligible impact in the long run. Guideline’s passive investing strategy is designed for long term success: we prioritize low cost investments and proper diversification within different asset classes. Diversification is important to decrease the impact of market fluctuations; when US stocks are down, you’ll have some safety in international stocks, bonds, and alternatives, and vice versa.
Dollar-cost averaging (a strategy where you invest a fixed amount of money at regular intervals over a long period) also lets you buy more shares when prices are low, and fewer shares when prices are high. This way, you aren’t buying a large amount of one investment at a bad time. So, while it might seem counterintuitive, a down market is actually a great time to invest: you can buy more shares at a lower price!
Finally, Guideline’s low portfolio expense ratios keep your costs far lower than that of a traditional investment portfolio. Instead of cutting into your retirement savings by paying hidden fees, you’re allowing more of your money to remain in your account to grow.
Ultimately, there’s never a bad time to start saving for your retirement and, due to dollar-cost averaging, investing during a down market can actually be advantageous for you. By investing in a 401(k), even if the economy’s looking bleak, your financial future won’t be.