It’s a challenging time to be an investor right now. The market has been volatile over the last couple of months, and with so much uncertainty in the world, there’s a chance we could see even more turbulence in the future.
While nobody can say for certain how the market will perform over the next few weeks or months, that doesn’t mean you can’t prepare. With the right strategy, you can keep your money as safe as possible — and that starts with avoiding three of the most common investing mistakes.
Mistake No. 1: Pulling your money out of the market
The most logical response to potential volatility may be to withdraw your money from the market. Stock prices could continue falling, so it makes sense to get out now.
However, that can sometimes be a risky move. The stock market is unpredictable, and there are no guarantees that prices will plummet — even amid global uncertainty. In the early stages of the COVID-19 pandemic, for example, the stock market saw a dramatic decline, only to rebound within weeks. It then went on to smash records over the next two years.
That doesn’t necessarily mean we’ll see a similar scenario now. But because nobody can predict how the market will perform, it can be risky to pull your money out. If you sell all your investments and the market surges, you could miss out on substantial gains.