Here’s Why Bear Markets Can Be a Good Thing for New Investors
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After much discussion about the stock market slipping into bear market territory, we saw it officially happen when the stock fell more than 21% on Monday from its record high in January with the S&P 500 falling over 21%.
Simply put, a bear market describes any stock index or individual stock that falls 20% or more from its recent peak. The S&P 500’s fall at Monday’s close marks the benchmark index’s lowest level since March 2021 and marks the first time stocks entered a bear market since the start of the pandemic in March 2020. This time around, some of the major contributing factors to the market’s decline include today’s 40-. Record-high inflation rate of the year, fears of recession and fears of interest rate hike once again this week.
While a bear market can indicate falling stock prices and possibly a weakening economy, it may actually be the perfect time for new investors to enter the market and start building wealth.
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How New Investors Can Take Advantage of Bear Markets
A bear market often provides an opportune time to buy a stock at a discount, making it a low entry point for those who have typically put off investing. Selling when everyone else is buying and, in this case, selling when everyone else is selling — also known as “buying a dip” — is a popular investment strategy practiced by Warren Buffett himself.
Since the shares are likely to have a rough road ahead, which means they will take some time to pay off, new investors will need to enter the market with the goal of long-term investments. Investing is a long game, after all, and by keeping your money in the market for a while, you’ll have time on your side if you need to recover from any losses; These short-term dips won’t set you back in the long run.
When you’re ready to put your money in this market, start investing regularly with small, specific dollar amounts — a technique otherwise known as dollar-cost averaging. This approach spreads out your investments and allows you to buy the market at different times at different prices that ideally balance each other out versus investing lump sums all at once – the latter returns Can do the max, but it requires taking more risk.
New investors can set up automatic contributions once or twice a month to exchange-traded funds (known as ETFs) or mutual funds, both of which offer instant diversification. You can access these investment vehicles simply by opening an online brokerage account.
ETFs tracking the S&P 500 are most popular for beginner investors. The Vanguard S&P 500 ETF (VOO) tracks the entire index and offers low management fees. Its current expense ratio (or management fee) is 0.03% at the time of this writing, which means you’ll only pay 30 cents per year for every $1,000 invested. For every $10,000 invested, this would equal $3 per year.
vanguard
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Minimum deposit and balance
The minimum deposit and balance requirements may vary depending on the investment medium selected. No minimum to open a Vanguard account, but a minimum deposit of $1,000 to invest in multiple retirement funds; Requires a minimum of $3,000 to enroll in robo-advisor Vanguard Digital Advisor®
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fees
Fees may vary depending on the investment vehicle selected. Zero commission fees for stock and ETF trades; Zero transaction fees for over 3,000 mutual funds; $20 annual service fee for IRAs and brokerage accounts, unless you choose paperless statements; Robo-advisor Vanguard Digital Advisor® charges up to 0.20% in advisor fees (after 90 days)
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bonus
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investment vehicle
Robo-Advisor: Vanguard Digital Advisor® IRA: Vanguard Traditional, Roth, Rollover, Spouse and SEP IRAs Brokerage and Trading: pawn trading other: Vanguard 529 Plan
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investment options
Stocks, Bonds, Mutual Funds, CDs, ETFs and Options
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educational resources
retirement planning tools
When adding mutual funds to your portfolio, look for brokers that offer no transaction fees — these are commission fees for buying or selling fund shares — and low expense ratios. For example, Fidelity Investments has more than 3,400 mutual funds with no transaction fees, but keep in mind that some of Fidelity’s mutual funds may require specific funding thresholds to be reached. Its robo-advisor option, called Fidelity Go®, invests in zero expense ratio Fidelity Flex® mutual funds that do not charge management fees or, with limited exceptions, fund expenses.
Fidelity Investments
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Minimum deposit and balance
The minimum deposit and balance requirements may vary depending on the investment medium selected. There is no minimum amount to open a Fidelity Go account, but a minimum $10 balance for a robo-advisor to start investing. Minimum $25,000 balance for Fidelity Personalized plans and mentoring
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fees
Fees may vary depending on the investment vehicle selected. Zero commission fees for stock, ETF, options trades and some mutual funds; Zero transaction fees for over 3,400 mutual funds; $0.65 per option contract. Fidelity Go is free for balances under $10,000 (later, $3 per month for balances between $10,000 and $49,999; 0.35% for balances over $50,000). Fidelity Personalized plan and advice has a 0.50% advisor fee
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bonus
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investment vehicle
Robo-Advisor: Fidelity Go® and Fidelity® personalized planning and advice IRA: Fidelity Investments Traditional, Roth and Rollover IRAs Brokerage and Trading: fidelity investments trading other: Fidelity Investments 529 College Savings; Fidelity HSA®
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investment options
Stocks, bonds, ETFs, mutual funds, CDs, options and fractional shares
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educational resources
Extensive equipment and industry-leading, in-depth research from over 20 independent providers
Marcus High Yield Online Savings by Goldman Sachs
Goldman Sachs Bank USA is a member of the FDIC.
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Annual Percentage Yield (APY)
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minimum balance
no one to open; $1 to earn interest
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Monthly fee
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Maximum Transactions
Up to 6 free withdrawals or transfers per statement cycle *Regulation D. 6/statement cycle withdrawal limit has been waived during the outbreak of coronavirus under
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exorbitant transaction fees
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overdraft fee
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Offer a checking account?
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Offer ATM Card?
American Express® High Yield Savings Account
American Express National Bank is a member of the FDIC.
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Annual Percentage Yield (APY)
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minimum balance
Minimum balance to open $0 . Is
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Monthly fee
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Maximum Transactions
Up to 9 free withdrawals or transfers per statement cycle *Regulation D. 6/statement cycle withdrawal limit has been waived during the outbreak of coronavirus under
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exorbitant transaction fees
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overdraft fee
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Offer a checking account?
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Offer ATM Card?
American Express National Bank is a member of the FDIC.
The interest rate and APY are subject to change before and after opening an American Express® High Yield Savings Account without notice.
Editorial Note: The opinions, analysis, reviews or recommendations expressed in this article are those of select editorial staff alone, and have not been reviewed, approved or otherwise endorsed by any third party.
