Time to Invest

Mike Zaccardi

A FRIEND TEXTED ME yesterday. He wanted my thoughts on putting cash to work given the big stock market decline over the past few weeks. I took my usual approach, saying it’s always a good time to make retirement contributions, and that he should go ahead and swoop in. That was when the S&P 500 was down roughly 2% in the morning. We texted again in the afternoon before the closing bell—and after the market had rallied big. He was suddenly hesitant to keep his buy orders in place.

I sent him a graph of the past five days of market performance. While stocks had indeed bounced off Thursday morning’s lows, short-term returns were still awful. Look at the year-to-date and it looks like a good old-fashioned correction.

Investors should always take a long-term view. U.S. stocks are up tremendously over the past three years. Foreign shares, however, are up a modest 25% in that time, dividends included.

This month’s volatility should serve not as a signal to exit markets, but as a reminder to put money to work. Maybe you, like my friend, should go ahead and make your annual IRA or health savings account (HSA) contributions. Perhaps you can front-load your 401(k) plan deferrals. It’s not about timing the market—it’s about prioritizing your long-term financial goals.

What’s more, if you haven’t yet made last year’s IRA contribution, you still have time. April 18 is the deadline to make prior-year IRA and HSA contributions. For small business owners like me, you can even make solo 401(k) contributions for 2021 up until the tax deadline.

Skittish about investing right now? Consider that wars are not the worst thing for stocks, as callous as that sounds. On the other hand, if inflation continues to run at 7% a year, that could pose a problem—but that’s not what the market expects.

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