In general, investing in equities for retirement is a smart approach in general. It’s smart to build assets with returns for your own pension. It works better than just saving, especially in times of higher inflation.
But is now a good time to invest in stocks for retirement? Analogous to our first paragraph, we can say: It depends.
Now is not a good time to invest in stocks for retirement if …
Basically, investing in stocks for retirement can now be both a good and a bad time. Which is always the case. This stock market situation is not very different from any other. It’s just a little more extreme and fleeting, which makes it seem special. On the other hand, shares are cheaper, which in turn is more attractive.
Nevertheless, you should not invest in shares for retirement if the capital is planned for your own livelihood. Investors who know they may need the money in one to three years, maybe even in the next five, should stay away from the market. It is true that the chance-risk ratio is more positive due to more favorable valuations. But it does not help you if the market still enters a downturn phase and you end up with less than before and may even have to work instead of looking forward to the time after working life.
So the bottom line is that if you are short-term oriented, now is not a good time to invest in stocks for retirement. The opportunity-risk ratio may be better after volatile pull-down years. However, there is no security.
With more time: Yes, definitely!
For a longer period than five years, depending on your risk and financial appetite, I would say yes, now is definitely a good time to invest in stocks for retirement. Ultimately, sales result in somewhat attractive quality for significantly more favorable terms. Some dividend stocks are cheaper, as is the broad market for ETF investors. In the growth segment, many stocks have crashed by 50% or even significantly more.
With the time factor in turn, these investments can lead to long-term orientation that they just provide good returns. Five years or more is a solid period for the market to move more towards business-centric quality. And no longer primarily prices the mood or short-term uncertainties.
So my answer would be: yes, now may be a good time to invest in stocks for retirement. But you should ideally have time to shift the risk-reward ratio to your advantage as much as possible.
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