I’m just starting out. I want to get busy with trading and investing. But the market is at an all-time high right now. I’m worried. What should I do?
Thanks for writing in!
Let me just say, I fully understand where you’re coming from. I get the anxiety and hesitation.
The sooner, the better.
Now, it might be easy for me to say this.
After all, I started investing in 2010. Stocks were a lot cheaper back then.
Sensing an opportunity, I decided to take control of my financial future by living below my means and plowing my savings into high-quality stocks.
Heavily investing in stocks allowed me to go from flat broke at 27 years old to financially free and retired at 33 years old.
I reveal the the nuts and bolts of that journey in my Early Retirement Blueprint.
I followed that Blueprint myself.
My early retirement lifestyle these days is pretty amazing.
That lifestyle is supported by the five-figure passive dividend income my real-money FIRE Fund generates on my behalf.
I built the Fund using the tenets of dividend growth investing.
I’ve regularly bought high-quality dividend growth stocks that you can find on the Dividend Champions, Contenders, and Challengers list.
Fellow contributor Dave Van Knapp has done a great job of describing what this investment strategy is, why it’s so great, and how to successfully execute it.
Check out his Dividend Growth Investing Lessons for more.
Suffice to say, DGI is all about exponentially growing wealth and passive dividend income.
But you can’t exponentially grow wealth if you don’t start.
Which brings me back around to where you’re at.
You’re delaying because of anxiety.
That could be a huge mistake.
I understand the fear.
But this fear is holding you back.
Let me relate where you’re at now to where I was a number of years ago.
However, you have to remember that 2010 wasn’t optimal, either.
It was far from perfect.
There’s never a “perfect” time to buy stocks.
There’s always uncertainty. Always anxiety.
Back in 2010, everyone was still freaking out from the Great Recession. People thought I was crazy to buy stocks!
“Look what just happened!” That’s what they’d say.
Except you can’t look at what’s happened. You have to look at what will likely happen over the next 10, 20, or 30 years, Javier.
We don’t invest in yesterday. We invest in tomorrow.
I still remember when the Dow Jones Industrial Average crossed over 12,000 points in early 2011. It wasn’t long after I started investing.
Prognosticators were predicting that the market would crash. 12,000 points had come too quickly after the crash.
Of course, hindsight is 20/20.
We can see what has happened since.
Over the past few years, the market has kept hitting new highs.
It’ll almost certainly hit more new highs for the rest of our lives.
Today’s peak will be tomorrow’s valley.
That’s just how the market works.
There was once a time when the 1,000 points on the S&P 500 was a record.
Then 1,100 points was a record.
Then 1,200 points…
You get what I’m saying here.
The stock market is made up of real businesses.
These businesses are selling more products and/or services, to more people, at higher prices.
That translates to more profits, which leads to higher stock prices over the long run.
Sure, the S&P 500 could drop tomorrow. Maybe even a lot. I have no idea precisely what the market will do tomorrow, let alone 10 years from now.
But I do understand how businesses work.
And with the world growing larger and wealthier, there should be more people buying more stuff in the future. All at higher prices (because of inflation).
If you let the market tell you what to do, you’ll never get anywhere.
And even if you start buying stocks right before a crash, it’s unlikely to be a big deal anyway.
If you’re anything like the 99% of other investors out there, you’re regularly putting cash to work.
That means you’re dollar cost averaging into the market. You’re catching the highs and the lows.
Even though I started investing back in 2010, I didn’t start to really put cash to work until around 2014 or so. That’s just how things worked out with my cash flow.
And I continue to regularly buy stocks, even with the market where it’s at.
To put things in perspective, let’s say you bought a bunch of stocks right before the Global Financial Crisis.
It dropped ~50% from peak to trough.
However, look where it’s at now.
It’s at 3,000 points.
That’s a double in just over 10 years – even with one of the worst recessions we’ve ever seen occurring during this period.
And like I noted earlier, someone buying stocks even at this most inopportune time was probably averaging in anyway.
So they should have kept buying as things fell, which led to even better results over the last 10 years.
Don’t miss the forest for the trees, Javier.
Focus on the long term.
If you’re ready to get started, make sure to check out my Undervalued Dividend Growth Stock of the Week series.
These are high-quality dividend growth stocks that look compelling on a fundamental and valuation basis.
They undergo a thorough analysis, including valuation opinions from professional equity analysts.
And then I present the ideas to the investment community free of charge.
I hope this piece gave you some valuable insight, Javier.
I’m not telling you to go out and do something you’re uncomfortable with.
Rather, I’m only trying to provide some perspective.
If you’re looking for absolute certainty, put your money in a box and watch it collect dust.
But if you’re ready to start compounding your wealth and passive income, do your research and get comfortable.
And make sure to start today.
I wish you luck and success.
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Disclaimer: Jason Fieber is not a licensed financial advisor, tax professional, or stock broker. Please consult with a licensed investment professional before investing any of your money. If your money is not FDIC insured, it may decline in value. To protect the privacy of our readers, any names published in this article are under aliases. In addition, text may be edited, omitted or paraphrased for grammar or length.