Don’t know how to invest now? Try this recommendation from Warren Buffett

IIt’s no secret that 2022 hasn’t been a good year for investors. The market has been down overall since the start of the year, and many people are seeing big impacts on their wallet balances.

There are several reasons why stocks have been volatile. Inflation has been rampant since the start of the year, leading the Federal Reserve to get aggressive with interest rate hikes. The fear, however, is that the Fed’s efforts to calm inflation could lead to a recession if expensive borrowing leads to a massive pullback in consumer spending.

While we are definitely dealing with a tough market and tough economic times, now is actually not the time to stop investing. On the contrary, if you are worried about inflation, now is a good time to continue investing in the market, especially since many stocks are trading at a discount.

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Still, you may not know how to invest right now, as no particular segment of the market is immune to volatility. If so, you might want to take advice from an investment giant. warren buffet.

It pays to be wide

Warren Buffett has long said that a large market index funds are a great choice for everyday investors who don’t want to take the risk – or the legwork – of picking up individual stocks. Therefore, if you don’t know how to invest right now, consider a S&P500 index fund, which will give you exposure to the 500 largest companies listed on the stock exchange today.

The advantage of going this route is that you don’t have to spend too much time or effort researching different companies. You also avoid the risk of choosing a company that will end up underperforming in the short term.

Certainly, when enough companies underperform, S&P 500 index funds can lose value. But all things considered, investing in the broad market may be a safer bet than putting all your eggs into a few specific stocks. Plus, S&P 500 index funds give you the benefit of diversification, which you’ll need to grow your money over time. A diversified portfolio can also protect you from losses to some degree during periods of severe market turbulence.

A good fallback option

If you’re good at picking stocks and have a number of companies on your current watch list, then by all means put some money into them now, especially if you can buy stocks at reduced price. But if you feel lost on the investing front, consider taking Buffett’s advice and investing in the broad market.

We don’t know when stock values ​​will recover to where they are today. What we do know is that as of this writing, the S&P 500 is down about 18% year-to-date. This does not mean that its value will not drop further. But it also means that there is great upside potential if you invest in the general market now, sit down and give your portfolio time to grow.

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