Stock prices have been surging. Have you already missed your chance to buy?
After a rocky couple of years, the stock market has been surging in recent weeks. The S&P 500 is up by more than 12% since late October alone, and it's soared by just over 20% since the beginning of the year.
While this has many investors feeling optimistic about the future, others are concerned that they've missed their best chance to buy. Many stocks are more expensive now than they were just a couple of months ago, and investing now could mean paying a premium.
With prices still on the rise, is it too late to invest in the S&P 500? And should you hold off on investing in case stock prices fall again soon? The answer could surprise you.
Image source: Getty Images.
When is the right time to invest in the stock market?
The market has been volatile over the past couple of years, and it's tempting to try to invest at just the right moment. If you're able to invest when prices are at their lowest and then sell when the market peaks, you could make a hefty profit.
However, timing the market accurately is incredibly difficult -- even for the experts. Nobody knows what the market will do in the short term, so it's impossible to know when stock prices have bottomed out or whether they'll fall again in the coming weeks.
Over the long term, though, the market is overwhelmingly consistent. Despite experiencing plenty of crashes, corrections, recessions, and other downturns, the S&P 500 has still earned positive total returns over decades.
In the past two decades alone, the market has faced everything from the dot-com bubble burst to the Great Recession to the COVID-19 crash and the most recent slump, along with countless smaller downturns along the way. Yet the S&P 500 is still up by nearly 215% since 2000.
^SPX data by YCharts
Over the long haul, there isn't necessarily a bad time to buy. Even if you had invested when prices were at their peaks immediately before a downturn, by simply holding your investment for a few years, you'd still have recovered your losses and gone on to see positive total returns.
This is a consistent trend with the S&P 500 throughout history, too. Analysts at Crestmont Research looked into the S&P 500's rolling 20-year total returns to see how many of those 20-year periods ended in positive total returns.
They found that every single period in the index's history resulted in positive gains. In other words, if you had invested in an S&P 500 index fund or ETF at any point and held it for 20 years, you'd have made money -- even if the market was extremely volatile in that time.
The key to keeping your money safe
Investing in an S&P 500-tracking fund is one of the simplest and most effective ways to keep your money safer. The index itself has a long history of earning positive returns over time and recovering from downturns. While there are never any guarantees when it comes to investing, opting for an S&P 500 index fund or ETF is about as close to guaranteed long-term returns as you can get.
It's not the only way to build wealth in the stock market, however. If you choose to invest in individual stocks, you can potentially earn far more than you could with an index fund. It's crucial, though, to ensure you're investing in the right places.
Not all stocks will be able to recover from downturns, but the ones with healthy fundamentals (such as a competitive advantage, strong financials, and a knowledgeable leadership team) have the best chances. Even if the market takes a turn for the worse, these types of stocks are the most likely to recover.
When the market is surging, it can be tough to know when to invest. The good news, though, is that there's never necessarily a bad time to buy stocks. As long as you're investing in the right places and keeping a long-term outlook, right now is a fantastic time to invest in the stock market.
FAQs
Is it too late to invest in the stock market? While stock prices are up significantly compared to a year or two ago, the good news is that with the right strategy, there's never necessarily a bad time to invest. Building wealth in the stock market is a long-term strategy.
Is the S&P 500 a good investment now? ›
The current concentration has helped drive a period of exceptionally strong US market returns. The S&P 500 has generated an annualized total return of 16% over the past five years, compared with a 30-year annual average of 10%.
How high will the S&P 500 go in 2024? ›
The estimates from strategists put the median target for the S&P 500 at 5,200 by the end of 2024, implying a decline of less than 1% from Friday's level, according to MarketWatch calculations. Heading into 2024, the median target was around 5,000 (see table below).
What is the average return on Motley Fool stock advisor? ›
Since launching in 2002, the Motley Fool Stock Advisor has delivered an average stock return of 644%*, significantly outperforming the S&P 500's 149% return in the same timeframe.
Should I wait to invest in the S&P? ›
One important thing for all investors to learn is that timing the market is impossible. And quite frankly, it's unimportant if you're investing in a high-quality S&P 500 index fund for the long term. Even if you buy at a market peak, your long-term returns should likely be excellent.
Can you lose money long term in S&P 500? ›
Can't the S&P 500 lose money? As with any investment, S&P 500 index funds carry the risk of losing money, particularly in the short term. In 2022, for instance, the S&P 500 fell by more than 18%. But historically, the S&P 500 has always recovered from its losses.
Should I invest $10,000 in S&P 500? ›
Assuming an average annual return rate of about 10% (a typical historical average), a $10,000 investment in the S&P 500 could potentially grow to approximately $25,937 over 10 years.
How should a beginner invest in the S&P 500? ›
You can't directly invest in the index itself, but you can buy individual stocks of S&P 500 companies, or buy a S&P 500 index fund through a mutual fund or ETF. The latter is ideal for beginner investors since they provide broad market exposure and diversification at a low cost.
Will S&P 500 hit $10,000? ›
The S&P 500 could approach or exceed the 10,000 level by the early to mid-2030s. Many investors take it as a given that—since returns on the S&P 500 have been strong for 10-plus years—stocks are expensive and over-owned.
Will 2024 be a bull or bear market? ›
Economic growth actually accelerated above its 10-year average in 2023. That resilience, coupled with a fascination about artificial intelligence (AI), changed investors' collective mood. The S&P 500 soared throughout the year and finally reached a new high in January 2024, making the new bull market official.
Trending Growth Stocks List in 2024
| Stock Name | Sub-Sector | Market Cap (in Cr) |
|---|
| Allcargo Logistics Ltd | Metals - Diversified | 140,068.27 |
| Oil India Ltd | Home Electronics & Appliances | 46,461.34 |
| Caplin Point Laboratories Ltd | Software Services | 46,054.67 |
| Godawari Power and Ispat Ltd | Software Services | 3,021.51 |
6 more rowsApr 25, 2024
S&P 500 YEAR-END FORECAST YET. Both Capital Economics and Yardeni Research have recently floated similar scenarios. Yardeni Research president Ed Yardeni has a 5,400 target for the end of 2024 but sees the benchmark hitting 6,000 in 2025 and 6,500 in 2026.
What are Motley Fool's top 10 stocks? ›
The Motley Fool has positions in and recommends Alphabet, Amazon, Chewy, Fiverr International, Fortinet, Nvidia, PayPal, Salesforce, and Uber Technologies. The Motley Fool recommends the following options: short March 2024 $67.50 calls on PayPal. The Motley Fool has a disclosure policy.
What are Motley Fool's double down stocks? ›
Adding to winning stocks can amplify gains. The Motley Fool advises holding onto winning stocks, as they often continue to outperform in the long run. "Double down buy alerts" from The Motley Fool signal strong confidence in a stock, urging investors to increase their holdings.
How much money do I need to invest to make $3,000 a month? ›
Imagine you wish to amass $3000 monthly from your investments, amounting to $36,000 annually. If you park your funds in a savings account offering a 2% annual interest rate, you'd need to inject roughly $1.8 million into the account.
How late is too late to invest? ›
It's never too late to start investing, but starting in your late 60s will impact the options you have. Consider Social Security strategies, income sources and appropriate asset allocation. A financial advisor may be able to help you project out your investment and income plan into the coming decades.
What is the 20 year return of the S&P 500? ›
The S&P 500 returned 345% over the last two decades, compounding at 7.7% annually. But with dividends reinvested, the S&P 500 delivered a total return of 546% over the same period, compounding at 9.8% annually. Investors can get direct, inexpensive exposure to the index with a fund like the Vanguard S&P 500 ETF.
What is the expected return of the S&P 500 in the next 10 years? ›
Optimistic: 6%-7% per year.
If you assume margins and P/E multiples will remain at their current high level, and expect sales and buybacks to grow at their historical rates, then you can anticipate making about 6% in returns per year over the next decade.
How much would I have earned if I invested in the S&P 500? ›
For a point of reference, the S&P 500 has a historical average annual total return of about 10%, not accounting for inflation. This doesn't mean you can expect 10% growth every year; you could experience a gain one year and a loss the next.
