The stock market is scary. But here's why you still should invest

Better buckle up. Volatility is back on Wall Street.Monday brought a massive selloff with the Dow dropping a r...

Posted: Feb 7, 2018 12:22 PM
Updated: Feb 7, 2018 12:22 PM

Better buckle up. Volatility is back on Wall Street.

Monday brought a massive selloff with the Dow dropping a record 1,175 points. At Tuesday's opening bell, it dropped another 567 points, but recovered and ended the day up 567 points Tuesday afternoon.

The wild gyrations can be scary for individual investors, particularly those that haven't been investing very long, and aren't used to seeing stocks go anywhere but up. But that doesn't mean you should be spooked out of getting into the market.

"No one likes to lose money," said Eric Roberge, a certified financial planner and founder of Beyond Your Hammock. "But it's important to take a long-term view and not make decisions in short-term volatility."

The stock market has been on an epic run, with the Dow racing 25% higher in 2017. People have gotten used to seeing their 401(k)s flourish.

Although a massive market drop can be attention-grabbing, it can also present a buying opportunity.

"The stock market is the only place I've ever seen where when something goes on sale, no one will touch it," said Scot Lance, managing director at Titus Wealth Management. "But if the price is going up, that is when everyone wants to buy it."

Related: Market fear is back in a big way

More tangible assets like real estate can be appealing for some people and help with diversification, but Roberge pointed out they likely won't bring the returns that stocks can over the long term.

"If you look at the long-term results of owning a single-family home in the suburbs, the gains on average aren't great, maybe around 3%. And if you take out inflation, it's less," he said. "If you have a long-term time horizon, the stock market is going to produce better results based on history."

Experts said the key to investing in the stock market is to have a plan: Calculate how much you can afford to invest, set a goal and timeline and determine your risk tolerance.

The earlier you start investing, the more time your money has to grow. If you are saving for something that's still decades away -- like retirement -- it's easier to ride out stock market downturns.

Related: Your 401(k) probably isn't as big as you think it is

Michael Bonnet sees Wall Street's recent fluctuations as a buying opportunity and plans to invest $500 in his IRA on Friday. The sophomore at St. Mary's University recently opened up the account after turning 18.

"With a correction or crash, you can get investments for cheap," he said. He is currently invested 100% in stocks.

For people already in the market and worried about their money, now is a good time to evaluate your portfolio and make sure you're still comfortable with your asset allocation. Stocks are more volatile than bonds, but tend to bring greater returns.

Keep in mind that a 4% drop in the Dow doesn't mean that your portfolio also took the same-sized hit. "If you are properly diversified, your portfolio is not doing what the market is doing," said Roberge.

Are you nearing retirement and worried about what the recent stock market volatility means for your 401(k)? Share your story with us.

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 1462456

Reported Deaths: 20308
CountyCasesDeaths
Marion2005922494
Lake992001456
Allen903391005
Hamilton70705539
St. Joseph63078746
Elkhart48098622
Vanderburgh46217523
Tippecanoe42115330
Johnson37119516
Hendricks35078455
Porter33900460
Madison28036530
Clark25186321
Vigo24768341
LaPorte22894307
Monroe22201243
Howard21344372
Delaware20937363
Hancock18289217
Kosciusko17513199
Bartholomew17399212
Warrick16060212
Wayne15757296
Floyd15399252
Grant14898293
Morgan13934230
Boone13172136
Noble11421140
Dearborn11355112
Henry11312201
Shelby11231150
Marshall11041166
Dubois10782152
Jackson10174104
DeKalb9944128
Cass9942142
Lawrence9914219
Huntington9823139
Gibson9131125
Montgomery9005140
Knox8762124
Harrison8718111
Whitley844771
Steuben8340102
Jasper8069113
Putnam795197
Clinton792994
Miami7914133
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Jefferson7551124
Ripley6993111
Adams6508101
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Wells5814120
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Posey529146
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Randolph4925128
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Brown222654
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Switzerland189414
Martin181921
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Union163619
Ohio119516
Unassigned0742

Ohio Coronavirus Cases

Data is updated nightly.

Cases: 2403645

Reported Deaths: 30922
CountyCasesDeaths
Franklin2596932036
Cuyahoga2572672998
Hamilton1666711699
Montgomery1103831586
Summit1066861382
Lucas895171149
Butler78647924
Stark747301383
Lorain62885783
Warren49934468
Mahoning49735909
Lake46850586
Clermont43541428
Delaware38876210
Trumbull38576748
Medina37611416
Licking36901401
Fairfield33848331
Greene32124416
Portage31381356
Clark30277440
Richland28251420
Wood27660289
Allen24372392
Miami22806389
Muskingum22298244
Columbiana22095399
Wayne21275354
Tuscarawas18847423
Erie18041221
Ashtabula17932338
Marion17503231
Scioto16553203
Ross16163249
Pickaway15536173
Hancock15251227
Geauga15244221
Lawrence13847186
Huron13399182
Union1329683
Belmont13255247
Jefferson12864257
Sandusky12770197
Athens11949106
Knox11511195
Seneca11454200
Ashland10795174
Darke10673196
Washington10564168
Auglaize10152141
Crawford9854175
Shelby9699155
Brown9400140
Fulton9235148
Guernsey9109115
Defiance9057134
Highland9035143
Logan8955141
Clinton8719121
Mercer8640111
Madison8568104
Preble8002160
Williams7848135
Putnam7731135
Ottawa7629120
Champaign7556112
Jackson7383114
Perry714598
Coshocton7043136
Morrow694580
Fayette662287
Hardin6219125
Pike617086
Gallia594989
Adams5779124
Van Wert5779120
Henry565592
Hocking5521103
Carroll4828100
Wyandot482289
Holmes4747161
Paulding401163
Meigs375071
Monroe299368
Noble279851
Harrison279461
Morgan276848
Vinton239845
Unassigned08
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