Why Bear Markets Can Be a Good Time to Invest

Key Takeaways

• In a bear market, you can buy stocks at cheap prices.
• When stocks recover in the later bull market, you’ll benefit from the stocks you bought at lower prices.

Katherine: Every day I look at this, the stock market just seems to be doing worse.

Carole: It sure feels that way.

Is it Good to Buy in a Bear Market?

Katherine: So should I take all my money out? It feels scary investing in a bear market.

Carole: Believe it or not, this is one of the best times for us to invest. It’s better that there’s a bear market now than later.

Katherine: Why is that?

Carole: In a bear market, you can buy stocks at cheap prices.

Katherine: Wait—I thought it was better to be in a bull market.

Carole: Yes, but when stocks recover in the later bull market, you’ll benefit from the stocks you bought at lower prices.

How to Invest in a Bear Market

Katherine: But couldn’t that take forever?

Carole: This all depends. What are you saving up for?

Katherine: I save for retirement and I have some money put aside for a big purchase one day, like maybe for a house.

Carole: All right, let’s think about it this way. For retirement, you still have 30 or 40 years for the stock market to bounce back. The same goes for your house savings, too. It’s likely stocks will recover by the time you need that money.

Katherine: OK, so should I be investing even more then?

Carole: All I’m going to say is this: Think of it as an opportunity and try not to get too wrapped up in the short term.

Katherine: Ok. I’ll try.

Check out “Why Should I Diversify My Portfolio?” for more from Carole Hodorowicz and Katherine Lynch.