Wall Street news isn’t very good these days. The US stock market has been falling for months. The S&P 500 has been particularly hard hit, with year-to-date performance his worst in 20 years.
If you have a large investment in the stock market, you may be wondering what to do. Listeners of money expert Clark Howard’s podcast recently asked for Clark’s advice on what to do about his investments: He put 13% of his salary on his 401(k) It says it has donated and has a current return rate of -25%. pain!
Are you losing money in the stock market right now? Read This
“Welcome to the deficit club now. We can take care of you wherever you are.”
But rest assured to hear what Clark has to say about investing in this downturn.
He points out that bear markets occur every few years, characterized by price declines of 20% or more from recent highs. But Clark says there’s something else going on right now, and it’s not all bad news.
“What is unusual is that both stocks and bonds crash at about the same time. he says. “Because the stock’s value has fallen so much, going forward the stock is actually a more promising holding than it was before we saw the 25% drop.”
Read why now is the perfect time to buy a Series I savings bond.
Why the stock market is falling? what can you do about it?
“The stock was overvalued,” says Clark. “And we are now in a period of correction. I don’t know when the end of the decline will come, but I can’t run for the hills”
Instead, Clarke advised listeners to continue investing in stocks through their 401(k) contributions, again pointing to the decline in stock prices. A lot is moving forward.
Clark is a proponent of long-term investing through dollar cost averaging. In other words, you’re consistently investing money in a particular investment vehicle (such as a Target Date fund) over a long period of time. He does this no matter what the stock market does.
Clark says he stays on course because he believes in the free market system.
“I believe that over time, people will start businesses out of self-interest, produce products and services that people ultimately want, and generate wealth. You can get a piece of this wealth.”
Need more investment advice? Read our in-depth guide on how to save and invest the Clark Howard way.