What You Need to Know Before Making an Investment

The last recession impacted stocks for several years, so it is natural to expect this bear market to react similarly. One good rule of thumb to help you create a financial plan is to assume that your stocks and funds could drop 50 percent overnight and stay down for a very long time. This will help you to better determine your timing and risk tolerance, in terms of investing in stocks.

Understanding your timing and risk tolerance when investing is essential but that does not mean that you can win by avoiding taking any risks. As previously mentioned, I tend to lean towards a more conservative approach with stocks and bond investments, and make sure that is aligned with the ever-increasing costs of living. Remember that when the stock market recovers, it tends to recover quickly, which can lead to decent returns if you are patient.

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