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Ask the Bitches: "Is this the right time to start investing?"

Ask the Bitches Pandemic Lightning Round: “Is This the Right Time to Start Investing?”

Welcome to the Ask the Bitches Pandemic Lightning Round! We’re working around the clock to answer your questions about coronavirus, the impact of quarantine, and the recession of 2020.

Today, we’re considering if now is a good time to start investing. Because your dad probably told you it’s a great time to invest. But is your dad right?!

We’ll be coming at you fast this week, answering as many urgent questions as we can. If you appreciate the extra effort, we would love a small donation to our Patreon. Thank you!

The question

“Dearest bitches, I finally paid off my student loans in January and the money that had been going to them has just been hanging tight in a savings account until I move it to my Roth IRA (right now it’s up to about $2k). The question, then: with the market, to quote a friend, ‘going down worse than your eighth jagerbomb,’ when is the best time to make that shift? It’s going into a robo-managed fund, so it’s not like I’m actively playing the market, but I’m still nervous. Help!”

Ah. Lovely. A slightly more optimistic question than our last few!

We’re going to answer this question straight, with the assumption that you’ve already taken the stability of your job, healthcare insurance, and emergency fund into ample consideration.

The answer

Timing the market

Let us turn—as we often do, during times of international strife—to the Dumpster.

Trying to buy low and sell high based on a presumption that you know when market fluctuations are coming is called “timing the market.” Also known as hubris, foolishness, and thinking you’re God or somethin’ (pronounced in a thick New York accent, like one cab driver shouting at another).

It’s one thing to have a general sense that the market is due for a correction. We did! But you play a dangerous game when you try to synchronize to turn a quick profit. If it were an easy, effective strategy, everyone would do it.

That said, the market just lost a ton of value. History suggests it will regain that value, eventually. Are you young? How soon do you expect to be drawing that money out? It depends entirely on you.

Candidly, if I could pick a year to be twenty-three again and just beginning to make my tiny baby investments, 2020 would be a strong choice.

Taking the plunge

I want to direct everyone to J. D. Roth’s phenomenal advice on what to do during a stock market crash. To summarize, J. D. would tell our nervous little bean here:

  • “If you believe stock prices are still high, then steer clear of the market. If you think they’re low, then buy.” In other words, if you’re looking for a deal on stocks, then yes, now is a good time to invest that money.
  • “Unless you sell your stocks, you haven’t lost anything at this point—it’s all on paper.” So chill, baby, chill.
  • Have a solid emergency fund before you even dream of investing. This is always important, but especially so right now.

If you’re pumped to take advantage of the market downturn to start investing for the first time, let me direct you to our girl Dumpster Doggy and her tutorial on how to invest your first $100. She is an essential follow for anyone considering investing during this time.

Another question

On a related note, there’s this question:

“What do I do about my stocks tanking because of coronavirus?”

Another answer

Nothing.

You do absolutely nothing.

The stock market (and investing in general) is meant to be a long game. You put money in steadily, and years or decades later, you reap the profits. If you want to get fancy with it, you buy low (like now) and sell high (when the stock market is doing really, really well). But the only thing that reliably makes a market high is lots and lots of time.

In the meantime, you should fucking ignore your investments like they’re your high school bully at a ten-year reunion when you’ve had yourself a major glow up and they’re still living in your shitty home town. 

People talking about how much they’ve “lost” in the stock market in recent weeks aren’t being completely accurate. The value of their stocks have dropped, but they won’t “lose” any money until they sell those stocks and withdraw their money from the stock market. There is still time for the stocks to recoup the value they’ve lost. And they very likely will!

Ergo: you can stop contributing to your investment accounts right now to prioritize savings, but by no means should you sell your investments. Only withdraw money from your investments if absolutely necessary.

Otherwise, hold fast!

More on this topic

Not enough for ya? Here’s more of us Bitches waxing basic on how to start investing:

7 thoughts to “Ask the Bitches Pandemic Lightning Round: “Is This the Right Time to Start Investing?””

  1. The whole “you can’t lose the money in the stock market until you sell it” is not really that accurate. If the company that you had invested money into had just went belly up and the government decided not to bail it out, guess what? you have lost money on that invesment. Your investment is now $0 (and knowing how things are going right now, I woudln’t be surprised if some companies actually do go bankrupt and don’t get bailed out). So if you think that that company will soon go bankrupt, probably a good idea to get money out of that one (even with a loss because that way you will at least get some money out instead of $0). Another thing is if you had bought ETFs and the company that had offered those ETFs goes bankrupt and the government doesn’t bail it out, again, you do lose that money even if you don’t sell (and, again, based on the stuff that happened in 2008, this is not outside of the realm of possibility). Same thing applies to investments made through brokerages that don’t properly handle/put up reserves for their clients. So, again, in those cases probably a good idea to sell and reinvest through a more trustworty/safer option. Sure. You will lose money on transactions but you will be avoiding a greater risk of losing everything at that point.

    I personally am not investing into stocks based on those reasons. I think it’s better to wait a bit for the situation to clear up. It’s highly unlikely that the market will start recovering any time soon (at least not until the world goes back to at least some sort of “normalcy”) so I’m not really losing anything by waiting. And while that’s going on, the situation will become more clear about who will survive and who wouldn’t.

    1. Hey, good point! Part of why we always recommend our readers invest in an index fund through a reputable broker. We’re not qualified to recommend specific stocks and companies—that’s way above our pay grade! But at the level you’re talking about, yep, money can be lost.

  2. I made a very expensive mistake by miscalculating how much I could contribute to my SEP last year, and then contacting Vanguard about how to correct that while in the midst of the crash right now. 🙁 I had to disperse the extra contributions, and my timing was terrible, so I lost at least $1500 from this whole debacle. Luckily we are very stable and I can afford the hit, I am just mad at myself.

    1. NOOOOOO!!!! Oh honey that blows. I’m so sorry.
      I had to roll over my 401K recently and Vanguard was SO slammed the customer service rep was practically dismissive on the phone. I’d never experienced that with them before, and I assume it’s because they’re all overworked due to the recession.

  3. This was such a useful article – thank you!! My husband and I were debating those exact questions and trying to figure out the path forward.

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