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Investment Advice

By Terry Savage on December 26, 2015 | Investments

Is this a good time to invest in the S&P 500? If so, how would I go about investing in the fund and how often should I invest(monthly, annually)? Currently, I am not making any money on my savings.

Terry Says:   I will answer the way I always answer this question:  It is ALWAYS a good time to invest in the stock market — IF you have risk capital, and IF you have a long-term (say 20-year) perspective!   If you can say yes to both questions, then you might contact Fidelity or Vanguard to open an account in their S&P 500 index funds.   And if you have a job with earned income, you could open an Individual Retirement Account, and depending on your age put $5500 per year into the account (or an additional $1,000 if over 50) and then keep putting in a regular amount monthly to grow tax-deferred for your retirement.  But you can only invest up to the amount you earn, up to those limits — not earnings that come from dividends, interest, or a pension.

But if you absolutely aren’t able to lose even one penny, then you want to avoid the stock market — especially in your older years.  Yes, over the “long run” the stock market as always outperformed what I call “chicken money” investments like bank CDs.  But if you panic and sell when the market drops, then you lose all the benefits of this long-term investment.   And believe me, you WILL panic and sell at the wrong time, unless you have created a long-term plan of regular investing through a S&P 500 index fund at one of the low-cost fund companies mentioned above.



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