The S&P500 dropped over 15% since January of 2022. It is one of the worst recessions for the tech companies and the top 500 companies in the United States. At the same time, the cost of living and the housing market has skyrocketed. In the past decade, most investors have savored the fruit of dollar-cost-averaging with the steady increase in our economy. However, the COVID 19 pandemic has become the transition point of our market, along with the great migration to cities like Las Vegas and Miami from middle-class families, which has pushed our real estate market to its limit. In this economic downturn, there are things that you can do to prepare so you are not falling behind financially. Here are five points that all investors should be aware of in the market of 2022.
1. Continue to invest- Dollar-cost averaging is superior to timing the market
It has been shown that time in the market is superior to timing in the market. There are statistics analyzed by the Money Guy Show that show exactly this. Suppose you have invested 100 dollars monthly at the S&P 500 since the 1980s with an average of 7% in return. In that case, you will still have millions of dollars on return of investment today, regardless of the volatility of the stock market. It has been shown that the Dot-Com bubble and the 2008 housing market have little to no impact in the long run. However, this is only true when you can afford to invest long-term. For older individuals, the dollar cost average strategy only work if you can at least invest for 5 years or more, which is slightly longer than the average length of a recession/bear market.
2. Increase your income by acquiring a high-income skill
It is no wonder that every investment book, such as the FU Money by Dan Lok and the Rich Dad Poor Dad by Robert Kiyosaki all talked about acquiring a high-income skill. For many of us, this means acquiring a skill set that the current market values, such as becoming a lawyer, physician, engineer, or other blue-collar jobs. I often encourage students from college to go for degrees that can train them with technical skills, such as the jobs I described above. Millionaires in the United States have an average of seven streams of income, and most of them work every day and invest what they can. As long as you can hustle through academics or tech school, this is an easy part and it will help fund your other investments and side hustles. With inflation this high, it is probably the right time to go back into school and get those degrees.
3. Diversify your income with real estate, eREITs, and ETFs
Another tip for the current bad market is to consider diversifying your portfolio. Despite the highest price in the stock market, you can easily diversify by investing in crowd-funding platforms such as Fundrise. It has minimal fees, and also you to chip in a small portion to invest in real estate. Fundrise has continued to show positive ROI even in a bad market. If you are interested, feel free to click the link below and register.
On the other hand, if you have always been dealing with real estate, consider adding on the exchange-traded funds, aka the ETFs. an ETF is a publicly-traded fund that you can buy via the New York stock exchange and invest in the top companies in the world and minimize risks at the same time. If you have invested in ETFs such as the VOO or VTI by Vanguard, then you probably know about ETFs. Again, remember that this is a long-term game. Only buy and hold, and don’t ever sell unless you retire.
4. Do not ignore the cryptocurrency market
In the era of 2022, it is hard to ignore cryptocurrency as a source of significant investment. Especially in the downfall of the stock market, cryptocurrencies like Bitcoin and Ethereum seem to be a great option to invest in as they are on sale at the moment. The easiest way by far to trade cryptocurrency is via the Coinbase platform. Its easy-to-use interface allows all users to quickly invest in the crypto market. However, we must know that this is an extreme example of a volatile market/investment category. Bitcoin alone has fluctuated between 35k to 40k for many months at this point. With the unforeseen upcoming federal laws and regulations, the future of crypto may not be as bright as people think. However, it is also very promising as digital currency is the future of our economy, and now is a good time to get a head start in its investment. If you are interested, join Coinbase with the link below!
https://coinbase.com/join/cpmll5
5. Don’t let your emotions get in the way.
Last but not least, do not let your emotions get in the way. It is easy in the current market to panic and sells everything to avoid losses. But historical data show that you are almost sure to win in the long run by keeping your investment up-to-date and continuing with dollar-cost-averaging. As long as you don’t sell, you will never lose! At this market time, make sure to keep working on your high-income skill and side hustles. Perhaps starting a blog, affiliate marketing, and photography can help push your financial state to the next level!