6 Reasons Why You Should Consider Investing Right Now

In times of uncertainty, it’s natural to feel a sense of caution when it comes to financial decisions, particularly investments. Whether you’re concerned about economic turbulence, rising inflation, or global events, it’s easy to assume that keeping your assets in cash or safe short-term investments is the best strategy. However, the reality is that an overabundance of caution can often be more harmful to your long-term financial health than taking a calculated risk and investing in the markets.

While it’s tempting to sit on the sidelines during uncertain times, experts like Naveen Malwal, an institutional portfolio manager with Strategic Advisers, LLC, argue that avoiding the market may come with its own set of risks. The S&P 500® has been up nearly 40% over the past year, even amidst concerns about inflation, interest rates, and elections. Staying out of the market could mean missing out on the potential growth that investing can offer.

If you’ve been holding a significant portion of your assets in cash because of fear or doubt, it may be time to reconsider your stance. Here are six compelling reasons why you should consider investing right now, rather than waiting for conditions to improve or waiting for a “better time.”

1. History Shows That There’s No “Wrong” Time to Enter the Market

One of the primary concerns for many investors is trying to time the market—finding the exact right moment to enter and exit. However, historical data consistently shows that timing the market is nearly impossible, and trying to do so can actually hurt your financial growth.

For instance, if you invested $5,000 at the start of every year for several decades, even if you did so during market peaks, your investment would have outperformed holding cash over the long term. The risk of missing out on key market growth days far outweighs any potential gains from trying to time your entry. “Historically, market timing has been practically impossible to do consistently,” says Malwal, noting that investors who consistently invested over time, regardless of the market’s position, tend to outperform those who try to predict short-term trends.

Simply put, there’s no “wrong” time to invest in the market, and trying to time your entry can ultimately cause more harm than good. The key to success is regular, disciplined investing.

2. Being Out of the Market, Even for a Short Time, Can Significantly Reduce Growth

It’s not just about when you get into the market—it’s also about staying in it. Research has shown that missing just a few of the best days in the market can drastically reduce your long-term returns.

For example, a hypothetical investor who missed just the top 5 best-performing days in the market since 1988 would have seen a 37% reduction in their long-term gains. While it might seem like a smart move to avoid investing during volatile times, being out of the market for even a short period could mean missing out on the significant rallies that drive long-term returns.

The lesson here is clear: even during uncertain times, staying invested and riding out the volatility is crucial for ensuring your portfolio’s long-term growth potential.

3. Stocks Have Proven Resilience During Uncertainty

In times of geopolitical turmoil, economic crises, or global pandemics, the natural reaction for many investors is to retreat to safe assets like cash. However, stocks have consistently proven to rise even amid periods of uncertainty. While past performance doesn’t guarantee future returns, looking at the historical context shows that, regardless of global upheaval, the market tends to recover and even thrive.

For instance, the 2020 COVID-19 pandemic created global panic and triggered a significant market crash. Yet, by the end of 2020, the stock market had rebounded and ended the year up nearly 20%. Investors who stayed in the market during the crash were able to benefit from the recovery, while those who opted to stay in cash missed out on the rally.

“Back in 2020, for instance, there was a lot of concern about the global economy, and people feared a repeat of the 2008 financial crisis,” Malwal explains. “But what we saw in 2020 was that, despite an extreme pullback, the market went on to rally the rest of the year.”

This resilience demonstrates that the stock market has historically been able to overcome even the most severe disruptions, providing ample opportunities for long-term investors.

4. Long-Term Investment Strategies Offer Better Odds for Success

The stock market can be volatile in the short term, with daily fluctuations that may seem as random as a coin flip. However, when you zoom out and take a long-term perspective, the odds of a positive outcome shift dramatically in your favor.

In fact, research shows that if you stay invested in the market for a year, you have almost a 75% chance of seeing a positive return. The longer you stay invested, the higher the likelihood that your investment will grow. This stands in stark contrast to cash, where, over a 15-year period, your chances of seeing a positive return could be as low as 2%.

“In the short term, the stock market can feel volatile, but the odds of seeing a positive outcome potentially improve the longer you stay invested,” Malwal says. For most investors, the key to success lies in taking a long-term approach and being patient.

5. Politics Have Little Impact on Market Performance

Many investors worry about how political changes—such as elections and shifts in control of Congress—will affect the market. However, historical data suggests that which party controls Washington has little impact on the long-term performance of the stock market.

The S&P 500 has averaged positive returns under nearly every political combination. Malwal points out that there’s no strong relationship between election outcomes and market performance, meaning investors don’t need to make drastic changes to their portfolios based on political predictions or fears. “There are dramatic differences between the proposals expressed on the campaign trail and the actual policy changes that take place once the candidate is in office,” Malwal adds, emphasizing that market conditions should guide investment decisions, not political promises.

6. Inflation and Rising Deficits Make Cash Vulnerable

For many investors, inflation and rising national debt are significant concerns. While inflation has recently eased, it remains a risk, especially if it begins to rise again. Holding too much cash can leave your portfolio exposed to the risk of inflation eating away at its purchasing power over time.

If you are worried about inflation or rising deficits, Malwal recommends investing in a diversified portfolio that includes stocks, bonds, and other assets that have the potential to grow. Cash may seem safe in the short term, but it is unlikely to provide the growth necessary to keep up with inflation or the rising costs associated with national debt.

A diversified investment portfolio can provide better growth potential and offer greater flexibility to adapt to changing economic conditions.

Conclusion: Finding the Right Balance

Investing in the market can offer significant growth potential, but it’s important to find the right balance for your financial goals and risk tolerance. Having a mix of stocks, bonds, and short-term investments can provide both security and growth, helping you navigate periods of market volatility. Whether you’re managing your investments on your own or working with a financial advisor, it’s essential to focus on your long-term goals and not get caught up in the short-term noise.

Ultimately, the risks of staying out of the market are greater than the risks of investing, especially if you have a long-term horizon. By investing consistently and staying patient, you’ll be better positioned to reach your financial goals, regardless of the challenges the market may face.