When will stocks recover? That is the key question on many investor’s minds right now. Undoubtedly, 2022 has been a challenging year for stock market investors. In addition to the market’s volatility, many investors have lost money in their IRAs and brokerage accounts since the year began. And that can be extremely demoralizing.
You might be wondering if the year 2023 will be a better year for the stock market. Well, it’s difficult to say.
Some of the factors that have increased volatility may subside in 2023, allowing stock values to rise once more. However, even if that doesn’t occur, investors who are holding losses in their IRAs or brokerage accounts right now don’t need to worry. You can also check out easyMarkets for your stock trading.
What does 2023 have in store for stocks?
Inflation has been a major reason for the stock market‘s volatility this year. Another culprit is the Ukraine conflict, which has put a strain on global supply chains and heightened global tensions. Both factors, however, may improve in 2023, and if this occurs, many people may see a nice recovery in their portfolios.
However, we cannot be certain that inflation will begin to fall. The Federal Reserve is attempting to achieve this by raising interest rates, but inflation may remain high for some time. Furthermore, there is always the risk that the Fed’s actions will precipitate an economic recession, resulting in a prolonged stock market downturn/volatility.
What if the stock market does not recover next year?
If your portfolio is losing money, you may be eager for things to improve. Even if stocks do not recover by 2023, there is no need to panic.
Ideally, the money you have invested in stocks is not money you expect to need anytime soon. So, if you’re saving for a long-term goal like retirement, don’t be concerned if the stock market takes some time to recover.
In fact, suppose you’re 30 years old right now and plan to retire sometime in your 60s. At this point, it makes no difference whether the stock market takes six months, a year, or three years to recover from recent events. What matters is that it recovers eventually.
The best course of action you can take in the interim to prevent long-term losses in your IRA or brokerage account is to wait for your investments to recover if they have lost value. In reality, you will only lock in your losses if you panic-sell stocks in the near future. Additionally, there’s no need to panic-sell if you’re not in need of money.
Moreover, early IRA withdrawals could have serious financial repercussions. If you withdraw money from that account before you turn 59 ½, you will be charged a 10% penalty for your withdrawal amount. Withdrawals from a brokerage account are not subject to those penalties, giving you more flexibility.
However, it’s still advised to keep your portfolio untouched while the market is down to avoid locking in losses you could have avoided.
It can be challenging to maintain a position in the stock market during times of turbulence. But it’s one of the best ways to build wealth over the long term. Market corrections have taught us that losing value is not the same as losing money.
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Should I pull out of the stock market?
Why it may be safer to invest in stocks, despite its unpredictable returns, the stock market has a long history of outpacing inflation over the long term. Therefore, it’s probably safer to keep your money invested than to withdraw it if you have money in the stock market that won’t be used in the coming years.
How do you survive the next market crash?
Given the current level of stock market volatility, it might be worthwhile to take some of the following measures to safeguard portfolios from a downturn:
- Diversify into different sectors and countries.
- Diversify into different assets.
- Timing your investments.
- Consider investing in total return funds.
- Other tips for protecting your portfolio include: Stop-loss and limit orders and Holding ISA contributions in cash.
At what age should one get out of the stock market?
At least by the time you reach the age of 70, you should hang it up. Not only that, but by that age, you are likely investing more money in bonds or an immediate lifetime annuity because you are trying to preserve what you already have rather than trying to make more.
- I'm a professional digital marketer with over 7 years of experience in the field. I create well researched content related to finance, cryptocurrency, stocks, forex and metaverse related articles.
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