Scared to Invest or Feeling Behind?
Scared to invest or feeling behind? It's not too late.
S&P 500 Index Fund
Follow the Facts, Not Fear.

With the recent stock market volatility and recession news, you may feel uneasy about investing. But you know what? When the market is down, it’s like stocks and mutual funds are on sale! This is a good time to invest. 

History shows us the stock market doesn’t stay down forever—it recovers time and time again. Just take a look at the S&P 500 (a common measuring stick for how the stock market is doing) to see how the stock market has changed over time.

Follow the facts, not fear.

S&P 500 Index Fund

With the recent stock market volatility and recession news, you may feel uneasy about investing. But you know what? When the market is down, it’s like stocks and mutual funds are on sale! This is a good time to invest. 

History shows us the stock market doesn’t stay down forever—it recovers time and time again. Just take a look at the S&P 500 (a common measuring stick for how the stock market is doing) to see how the stock market has changed over time.
 

The S&P Index Fund Over Time

Over a year (May 2021–May 2022): It was down only 5%. 1
Over the past five years (May 2017–May 2022): It was up 64% 2
Over the past 30 years (May 1992–May 2022): It had a cumulative return of about 687%. 3

When you look at year-to-year returns, it can make your head spin, but keeping a long-term perspective on market performance can help you not get caught up with all the ups and downs. Don’t let market volatility keep you from investing.

See It as a Great Time to Catch Up on Investing

If you’re behind, you might feel like you’re never going to catch up on your retirement goals. But don’t let this market (or your rapidly approaching birthdays) keep you from taking the next step. It’s never too late to invest for your retirement. Even if you’re just starting out, you could still have a sizable nest egg by the time you retire.

Here are a few ways you can save extra cash to invest in your retirement:

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Look for savings in your monthly budget.

Cancel some subscription services, eat at home more, and look for better deals on car insurance.

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Find ways to increase your income.

Get a side hustle, rent out a room in your home, or sell stuff that’s lying around the house collecting dust.

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Turn your home into a wealth-building tool.

Pay off your mortgage early. Then you’ll have some room in your budget to put more cash toward investing.

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Push back retirement a couple of years.

A few more years of working and building compound interest on your investments can help you get where you want to be if you feel really behind.

Investing adds up...You don't have to retire broke!

Chart representing compound growth to $1M from age 25 to 65, and 40 to 65
$120 a month invested from age 25–65 could grow to $1 million.
$650 a month invested from age 40–65 could grow to $1 million.

*Based on 10–12% annual returns, which is what the S&P 500 index fund has averaged over 30 years

Know when to invest and how you can do it.

Don’t wait to invest because the stock market has ups and downs. Just make sure you’re in the right place to start.

As a general guideline, here's what we suggest:

Invest 15% of your income in a retirement account like a 401(k) or Roth IRA. Also take advantage of the match from your employer if you get one.

Spread your money out across different investments, like growth stock mutual funds, that have a history of performing well over time.

Keep a long-term perspective, and never invest in anything you don’t understand.

Work with a financial advisor or investing pro to help you with all of this.

"You don't have to do this alone. Get a pro in your corner so you can invest with confidence." -Dave Ramsey, Personal Finance Expert
"You don't have to do this alone. Get a pro in your corner so you can invest with confidence." -Dave Ramsey, Personal Finance Expert "You don't have to do this alone. Get a pro in your corner so you can invest with confidence." -Dave Ramsey, Personal Finance Expert

Take full advantage of matching, Roth and other accounts.

Not sure where to invest for retirement? It depends on which retirement accounts you qualify for (and which ones are the right fit for you). But the way we look at it, match beats Roth beats traditional. Let’s break it down.
 

Match

We will always take free money. Who wouldn’t? So, if your employer offers a match with their retirement plan, invest enough to get it all. You can think of it as a 100% return on investment—if your match is fully vested. Fully vested simply means all of your employer’s contribution belongs to you (whether that money is fully vested right away or over time depends on the company).

Roth

Do all the Roth you can through employer-sponsored or individual accounts. A Roth lets you make contributions with after-tax money, and then you have tax-free growth and tax-free withdrawals in retirement. And the majority of your Roth 401(k) or Roth IRA balance is likely to be growth at 
retirement age.

Traditional

If you don’t have a Roth 401(k), invest up to the match in your traditional 401(k). Then, if you qualify to contribute to a Roth IRA, max that out. If you’re still not saving 15% of your income with those options, then go back to your traditional 401(k) and invest the rest there.

Keep in mind, these are general guidelines. We recommend working with an investment pro who can guide you through investing options and help you make the right choices for you.

Take the guesswork out of finding a pro.

Our SmartVestor program can instantly connect you with a SmartVestor Pro who can work with you on your investing plan and help you navigate the ups and downs of the market.


Ramsey Solutions is a paid, non-client promoter of SmartVestor Pros. Learn more.

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