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!
“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.
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.
On a related note, there’s this question:
“What do I do about my stocks tanking because of coronavirus?”
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!
Not enough for ya? Here’s more of us Bitches waxing basic on how to start investing:
- Investing Deathmatch: Managed Funds vs. Index Funds
- Investing Deathmatch: Traditional IRA vs. Roth IRA
- Investing Deathmatch: Paying off Debt vs. Investing in the Stock Market
- Investing Deathmatch: Investing in the Stock Market vs. Just… Not
- Investing Deathmatch: Stocks vs. Bonds
- Investing Deathmatch: Timing the Market vs. Time IN the Market