Another rule of thumb advises you to invest 10 percent of your gross income annually. But the amount you need to put away depends on your age, the amount you’ve already saved and other factors.
Here’s one more investment “anchor”: Sooner or later, all stocks will bounce back. Actually, some stocks never recover from major losses, or, if they do, it takes many years - and during that time, you might find better opportunities for those investment dollars.
To invest successfully, ignore the rules of thumb - and make the moves that work for your individual situation.
How Long Should You “Park” Your Money?
We’re living in uncertain times, both politically and economically. So you may be tempted to take a “time out” from the stock market. But is that a good idea?
Of course, you can always “park” your investment dollars in Certificates of Deposit or money market accounts. Your principal will generally be protected, and you’ll earn a fixed rate of return.
However, although CDs and money market funds may appear relatively safe, they might not protect you from the effects of inflation. And, over time, even a low rate of inflation can erode your purchasing power.
Furthermore, the longer you park your money, the greater your chance of missing out on the early stages of a market recovery.
It’s not always easy to keep investing during difficult times. But, in the long run, it can be more rewarding than getting stuck in “park.”
Contact Wendell at Edward Jones www.edwardjones.com.
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