01 FACTORS TO
CONSIDER WHEN YOU’RE INVESTING
Vehicles of Investment Suited for T o d ay ’ s Portfolio
T
BY DYLAN ROCHE he saying goes that we should always “save for a rainy day.” But what this saying doesn’t tell us is that everybody’s rainy day looks a little bit different…and because of that, everyone’s means of saving will be a little bit different too.
The same goes for investing. Unlike saving, investing entails putting money toward something that could increase or decrease in value over the years—assets like stocks and bonds. The idea is that you can make a lot more money than you would simply by saving, but with the added risk you could also lose money.
And the money you make off those investments can go to cover all kinds of “rainy days,” those times in life when expenses surpass income: times of unemployment or illness, times when you need to afford a big purchase like a home or college tuition, or even that time so many people are working relentlessly toward: retirement.
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What’s Up? Annapolis | February 2021 | whatsupmag.com
The approach you take to investing can make all the difference—investing is strategic, and it requires different decisions for everyone. FIRST, CONSIDER THE MARKET. If you’re thinking of investing, you’ve probably well versed about the difference between a bull market and a bear market. Bulls charge at you fast with their horns raised up, so it makes sense that a bull market is one when the economy is strong and for all intents and purposes, healthy. The market is rising, so more people are looking to invest and are less likely to sell. This high demand and low supply imply higher pricing on investment vehicles. Conversely, bears are lumbering animals and the preferred simile for a market that stems from a receding economy. Assets are losing value, so investors withdraw their money with the hopes of holding onto it until the market gets better. By definition, a bear market is one when prices are 20 percent lower than they were during a recent bull market. The challenging part about watching the market is that it fluctuates over a short period of time; instead of paying attention to these frequent changes, you should evaluate long-term patterns. And a professional fiduciary can guide you in this regard. The year 2020 proved to be an especially volatile year for the market, and experts disagree as to
whether it truly ever entered a bear market or not. “As 2020 showed with the COVID-19 pandemic, markets can become volatile very quickly,” explains Bankrate, a consumer financial services company based in New York City. “In March, the market rang up some of its biggest daily declines ever, followed by some of its strongest rises ever. After a strong sell-off early in the year, the market rebounded and set a new all-time high in the summer, despite an ongoing recession. Concerns surrounding the presidential election year may also be driving markets to be more volatile.” In fact, we did see a highly fluctuating market on and after the November 3rd presidential election, with the Dow Jones Industrial Average ultimately soaring to just above 30,000 points before the holiday season began—a historic first. The S&P 500 and NASDAQ paced along similarly. So, does this imply market gains will continue throughout 2021? It’s hard to say. Many investors are hoping the optimistic outlook on a COVID-19 vaccination could mean the economy will have the chance to fully open back up again. However, this isn’t a guarantee. “Even if there is a cure soon, and life returns to relatively normal, things may never return to exactly the way they were,” explains RealWealth Network, a financial and real estate education company founded
