4 Tips for Investing in This Bunny Market
Not a bear or a bull, today's market zigs and zags and can confuse us all.
In financial speak, the performance of the stock market can be described in animal terms—a bear market or a bull market.
The origin of this animal terminology is uncertain. One explanation goes back to 18th century England when the middlemen of bearskin sales were called bearskin jobbers, or bears for short. They would often sell the skins they didn't even have yet at speculative prices—and risk losses if the trappers decided to sell at higher-than-anticipated prices. The practice leant itself to a French proverb that translated to: "Don't sell the bear's skin before you've killed him." The term bear stuck for describing a down market. And bull was considered the opposite because bull-and-bear fights were popular at the time. So bull markets are when stocks are charging upwards.
What are we in now?
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
I'd call it a bunny market.
Erase visions of Bugs Bunny or Roger Rabbit from your mind. A bunny market is a stock market that zigs and zags, but doesn't really go anywhere. And just because the market is only hopping along doesn't mean it's not a good time to invest.
Here are some tips for investing in this bunny market:
1. Take baby bunny steps.
If your current financial situation feels unsteady, I suggest starting small. Even modest investments of $100 or $200 can make a significant difference in building wealth. And the systematic investing of smaller amounts, or dollar-cost averaging, in a 401(k), Roth IRA or 529 plan can add up over the long term. It's always a good idea to take advantage of the time value of money and capture all the tax-deferred or tax-free growth you can.
You can apply this strategy to other parts of your overall financial picture, too. If you are thinking about purchasing a house, consider buying an item or accessory for your new house. For example, buy a clock and hang it up in your current home to remind you of good times to come.
2. Research before buying.
I want my clients to be informed prior to committing to a large purchase or investing in a business or product. If the business is established, look at the company's mission statement and financial reports online. Thorough research can help ease unnecessary financial stress.
3. Take your time and check your risk tolerance.
Back to bunny imagery, think about the tortoise and the hare. I always tell clients that it’s not prudent to rush into anything if you don’t feel comfortable. Could it be butterflies in your stomach, or maybe something is telling you that the investment is a bad idea? You can always turn down an investing opportunity. In the end, the only thing wasted is your time. Of course, your time is valuable, but the bottom line is you don't want to lose your money by making quick but bad decisions. Remember, slow and steady wins the race. You need to give yourself time to understand the why behind your investment decisions and confirm whether it aligns with your long-term financial plan.
4. Work with an adviser you trust.
The best advice is to invest in building a relationship with a CFP® professional who can help you develop a financial plan. Especially if something is bothering you about a decision, you can talk with your financial adviser and take comfort in having a knowledgeable expert help you stay on track while the market continues hopping all around.
Marguerita M. Cheng is the Chief Executive Officer at Blue Ocean Global Wealth. She is a CFP® professional, a Chartered Retirement Planning Counselor℠, Retirement Income Certified Professional and a Certified Divorce Financial Analyst. She helps educate the public, policymakers and media about the benefits of competent, ethical financial planning.
-
S&P 500 Tops 7,000, Fed Pauses Rate Cuts: Stock Market TodayInvestors, traders and speculators will probably have to wait until after Jerome Powell steps down for the next Fed rate cut.
-
The Met Opera May Sell Its Iconic Paintings. Is it a Good Investment?Buying the Marc Chagall murals would come with a big stipulation attached.
-
Do You Really Need All Those Phone Plan Perks?Unlimited data plans now come bundled with streaming, travel perks and device deals — but many people pay for extras they rarely use.
-
Today's Senior Living Communities Are Not Your Grandma's 'Old Folks' Home': An Expert Guide to Shopping for the Right FitSenior living facilities have improved and are as diverse as the people who inhabit them. Now, they're more than just a place to go — they're a place to grow.
-
3 Common Misconceptions About Working With a Financial PlannerThink financial planners are only for the wealthy and that AI can replace human advice? Nope. Even people with moderate wealth need professional advice.
-
Should You Consider Investing in the Quantum Computing Sector? This Investment Adviser Has Some SuggestionsInvestors interested in quantum computing could consider ETFs focused on cloud services enabling small businesses to use big technology.
-
I'm an Estate Planning Attorney: These Are the Estate Plan Details You Need to Discuss (And What to Keep Private)Gen Xers and Millennials would like to know if they're going to inherit (and how much), but Baby Boomers in general don't like to talk about money. What to do?
-
I'm a Financial Adviser: This Is How You Can Minimize the Damage of Bad Market Timing at RetirementPoor investment returns early in retirement on top of withdrawals can quickly drain your savings. The ideal plan helps prevent having to sell assets at a loss.
-
'You Owe Me a Refund': Readers Report Challenging Their Attorneys' BillsThe article about lawyers billing clients for hours of work that AI did in seconds generated quite a response. One law firm even called a staff meeting.
-
7 Questions to Help Kick Off an Estate Planning Talk With Your ParentsIt can be hard for aging parents to discuss estate plans — and for adult kids to broach the topic. Here are seven questions to get the conversation started
-
Down But Not Out: 4 Reasons Why the Dollar Remains the World HeavyweightThe dollar may have taken a beating lately, but it's unlikely to be overtaken as the leading reserve currency any time soon. What's behind its staying power?
