The Dow Jones Industrial Average dropped more than 500 points yesterday. That’s a decrease of about two percent.
We’ve seen his before, and it feels like a small change. So why do investors and reporters covering Wall Street seem to freak out? Here’s what HelloSWFL learned from financial advisers.
This is the longest bull market we’ve ever seen. That means share prices are rising and it’s a good time to buy stock. So if you’re lucky, you could see a huge profit from investing in companies right now. But, that luck will eventually run out. The market has ups and downs, which is why investors are on edge.
A drop in the Dow means a drop in stock prices. If the drop is big enough, a recession could be right around the corner. Most people are invested through their 401Ks. So if the stock market drops, our retirement funds dip. To avoid this, financial advisers recommend that you diversify your assets.
If you invest, don’t put all of your money into one company. Instead, put smaller amounts of money into three or four different company stocks.
If something goes wrong with one of your investments, you still have others to fall back on.