Should I Buy Stocks Now Amid Such Uncertainty?

Tens of thousands of people turn to Google every month to ask if now is a good time to buy stocks. It’s a loaded question, and the answer depends more on your investing goals and time horizon than it does on what the market is doing on a given day.

And even if the market is experiencing some stress, volatility shouldn’t necessarily mean sitting out of the market. If you have some savings to invest, feel ready to buy stocks, and don't need the money for at least five years, then yes, jump in. Even when the market has lows, if you're invested for the long term, you'll have time to recover losses. Historically, it has taken an average of about two years to recover from a stock market crash.

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Understanding the Main Street-Wall Street disparity

The stock market reflects investor sentiment about the future, not what’s happening right now. While retail investors (individuals) might be more inclined to buy and sell based on daily headlines, institutional investors (companies, like banks and wealth management firms) are looking far ahead, meaning the stock market's performance may not always match up with current economic conditions.

The S&P 500 is also market cap-weighted, meaning larger companies will have a bigger impact on its performance (see how the S&P 500 works to learn more about this). Many of the largest companies in the index are in tech. Those companies have pushed the S&P 500 to a series of record highs in 2024, despite the ongoing economic issues caused by high inflation and high interest rates.

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Timing the market vs. time in the market

When you start investing isn’t as important as how long you stay invested, said Marguerita Cheng, a certified financial planner and CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland. And that’s a maxim to remember right now, too.

“The best way to build wealth is to stay invested, but I know that can be challenging,” Cheng said in an email interview.

It’s easier if you invest only for long-term goals. The reason you don't invest money you may need in the next five years is because it’s entirely possible the stock or mutual fund you purchase will drop in value in the short term. If you need those funds for a large purchase or emergency, you may have to sell your investment before it has a chance to bounce back, resulting in a loss.

But if you’re investing for the long term, those short-term drops aren’t of much concern to you. It’s the compounding gains over time that will help you hit your retirement or long-term financial goals. (See how compounding gains work with this investment calculator.)

It is possible to invest for shorter-term goals using more conservative investments, such as bonds or fixed-income investments. These tend to be more resilient against stock market downturns but often rise much less than stocks during bull markets. You can tailor your asset allocation — the breakdown of your portfolio between volatile investments such as stocks, and conservative investments such as bonds — to suit different goals with different time horizons.

How the S&P 500 is doing today

Here's how the S&P 500 is performing today against the closing value of previous years. Also note the long-term averages, which help to bolster the argument that time in the market is more important than timing the market.

Stock market data may be delayed up to 20 minutes, and is intended solely for informational purposes, not for trading purposes.

» Want more info on graphs? Learn how to read stock charts

The water’s fine, but wade in slowly

One of the best strategies for remaining calm and staying invested during periods of volatility is to treat investment contributions like recurring subscriptions — a technique known as dollar-cost averaging.

Through this approach, you invest a specific dollar amount at regular intervals, say once or twice a month, rather than trying to time the market. In doing so, you’re buying in at various prices that, in theory, average out over time.

Robert M. Wyrick Jr., managing member and chief investment officer of Post Oak Private Wealth Advisors in Houston, notes this is also an excellent strategy for first-time investors looking to enter the market during times of uncertainty.

“It’s very difficult to time when to get into the market, and so there’s no time like the present,” Wyrick says. “I wouldn’t go all-in at once, but I think waiting around to see what happens to the economy or what happens to the market in the next three, six or nine months in most cases ends up being a fool’s errand.”

What stocks should I buy right now?

Some stocks perform better during economic volatility than others. But most people are better off making consistent investments in index funds, rather than trying to pick stocks.

So how, exactly, do you start dollar-cost averaging into the market? A common strategy is to pair this with stock funds, such as exchange-traded funds.

To dollar-cost average, you could set up automatic monthly (or weekly, or biweekly) investments into an ETF through your online brokerage account or retirement account. Through this approach, you would achieve the benefits of dollar-cost averaging and diversification, all through a hands-off strategy designed for building long-term wealth.

Bottom line

So, if you’re asking yourself if now is a good time to buy stocks, advisors say the answer is simple, no matter what’s happening in the markets: Yes, as long as you’re planning to invest for the long-term, are starting with small amounts invested through dollar-cost averaging and you’re investing in highly diversified mutual funds and ETFs.