3 Reasons Why Now is a Dangerous Time to Invest On Your Own

3 Reasons Why Now is a Dangerous Time to Invest On Your Own

There’s a lot going on right now in the stock market, and a lot in the country and the world that influences it. From federal government policy and the pandemic to crypto currency and supply chain issues, there’s a lot to consider and a lot that can get you antsy to make a move on your investments. But here are three reasons why now is a dangerous time to invest on you own:

1. Increased Volatility

Sure, there are always ups and downs in the stock market. That’s the sign of a healthy and effective one, in fact. But currently, it’s buzzing with volatility. After the stock market bottomed out at the beginning of the pandemic, it bounced back and by the end of August 2021, more than doubled in value. Then, along came September which ended up the worst month since March 2020.

Fear of inflation has some experts quite pessimistic about the final quarter of the year. Others, however, aren’t really worried. With all of this uncertainty, it’s not the best time for investors to take matters into their own hands and try to DIY it, or predict what will happen next.

2. Temptation to Time the Market

It’s easy to get yourself all worked up looking at the highs and lows of the market on a daily, weekly, or monthly basis. When the low phases seem to come more frequently, panic can start to set in, and with that panic comes the temptation to sell or move to cash.

Unfortunately, when investors give into that temptation, they almost always sell low and then re-buy at higher prices for a big loss overall. As the saying goes, time in the market always beats timing the market. Stay the course, play the long game, and your investments will reap the benefits.

3. Influencers Creating FOMO

Of course, it seems harder and harder these days to keep a cool head, especially when influencers are stoking your fear of missing out (FOMO). The GameStop/Reddit scenario of average joes taking down hedge funds and making a killing earlier this year seems to have only further fueled the movement of everyday investors — and especially young adults — trying to jump on the latest thing.

Don’t let others (who don’t know your financial goals or individual risk tolerance level) goad you into making investments just because they’re “trending.” Fear and greed often spearhead investment behavior and emotional decisions with your money aren’t always good ones.  Accepting unnecessary risk is something that doesn’t need to be added to today’s economic climate.

Gain professional perspective with a Trusted Advisor

The best way you can keep your investments growing is to let them do the work for you. Compounding gains over time will help you hit retirement or long-term savings goals (college, new house, new car, weddings, etc.) without the added stress or risk of acute loss. Of course, risk of loss accompanies any investment, but there are smart ways to hedge against unnecessary risk to safeguard what you’ve earned.

At any given time, there are countless influences affecting the market. Some are easier to identify than others. But the key to getting through these times of uncertainty is less about knowing exactly where we are in any given market cycle, and more about trusting that sticking to your investment plan is the best way to get closer to your goals.

At Uncommon Cents Investing, we help investors and their families navigate the ups and downs of the market while keeping them on track to meet each of their financial goals. To learn more about our services, we encourage you to contact one of our advisors today.

Sheena Hanson, CFP® - Investment Advisor Representative and CCO

More About the Author: Sheena Hanson