Just How Safe Is the Stock Market Right Now? And Should You Invest?

Investing in the stock market can be daunting, especially during periods of volatility. While we’ve been in a bull market since late 2022, stocks have been shaky over the last few weeks — leaving some investors feeling concerned and pessimistic about the future.

Now with prices slightly rebounding in recent days, many people are conflicted about whether to invest now or wait. If stocks dip again, investing now may not seem like the best idea. But if the market surges, it may be wise to buy now.

So just how safe is the stock market? And should you invest now or wait a little longer to see what happens? The answer is simpler than you might think.

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How safe is the stock market right now?

While volatility can be tough to stomach, the market is safer than it often seems — as long as you keep a long-term outlook.

In the short term, the market can experience extreme ups and downs. But over decades, it’s incredibly consistent at earning positive total returns. As long as you keep your money in the market for as long as possible, then, it doesn’t necessarily matter what the market is doing right now.

For example, say you had invested in an S&P 500 index fund in November 2007 — just one month before the Great Recession officially began. The S&P 500 wouldn’t enter a bull market until mid-2009, and your portfolio would have taken a significant hit during that year and a half.

By today, however, you’d still have earned total returns of around 243% — more than tripling your money.

^SPX data by YCharts

This is a trend that has repeated throughout history, too. If you’d invested in an S&P 500-tracking fund in in March 2020 — immediately before the market crashed as a result of COVID-19 fears — you’d still have earned total returns of nearly 74% by today.

^SPX data by YCharts

In other words, as long as you stay in the market for the long haul, there’s never necessarily a bad time to invest. Even if stock prices plummet tomorrow, you’re likely to see positive returns over time. The sooner you invest, the more time your money has to grow — and the more you can potentially earn.

The key to protecting your money

A long-term outlook can help soften the blow of short-term volatility, but it’s equally important to ensure you’re investing in quality stocks that can survive the market’s inevitable ups and downs.

Shaky stocks can still perform well when the market is thriving, but they’ll often have a difficult time recovering from downturns. Even if you keep a long-term outlook, these stocks may not survive over time. Strong stocks from healthy companies, though, are much more likely to rebound from slumps and experience consistent growth.

The most reliable stocks are the ones from companies with solid underlying business fundamentals — which include everything from strong financials to a competent leadership team to a competitive advantage in the industry. By filling your portfolio with these types of stocks, you’re far more likely to survive even the worst market downturns.

With the right strategy, there’s never necessarily a bad time to invest in the stock market. Regardless of whether prices surge or dip in the coming months, by investing in quality stocks and staying in the market for the long haul, you can maximize your earnings while minimizing risk.