A bull market is coming. Here’s how investors can take advantage of it. | Economic news

The last few months have been difficult for investors. The S&P500 is down more than 17% since the start of the year, and many people fear that a stock market crash is on the horizon.

If you’re feeling pessimistic about the future of the market, you’re not alone. But a bull market is coming, and now is the perfect time to take advantage of it. Here’s how.

Image source: Getty Images.

When will the stock market recover?

The bad news is that the stock market can be unpredictable and no one knows exactly how it will behave in the short term. It is possible for stock prices to fall in the coming weeks or months, and a stock market crash is a possibility.

The good news, however, is that each bear market in history eventually gave way to a bull market. In other words, no matter how bad the market is, it will recover and continue to show positive average returns over time.

While that’s not too reassuring right now, it does mean the stock market is safer than it looks. Investing is a long-term strategy. Although no one knows exactly how long this crisis will last, it is almost guaranteed that the market will thrive over time.

How to increase your income despite volatility

When stock prices fall, it may be tempting to stop investing or withdraw your money from the market. However, to take full advantage of the inevitable bull market, it is essential to invest now.

The best way to maximize your gains in the stock market is to invest when prices are at their lowest, then hold your investments until the market inevitably recovers. If you only invest when the market is booming, you are paying a premium for your investments and spending far more than necessary.

Investing in a downturn can be daunting, but it can pay off big. For example, towards the end of the Great Recession, the market bottomed out in March 2009. But in the year that followed, the S&P 500 jumped almost 70%.

^SPX given by Y charts.

If you had stopped investing throughout the recession, you would have missed out on these gains. But the more you invest during market declines, the more you can potentially earn when prices eventually rebound.

The secret to maximizing your returns

Not all investments are created equal, and some stocks will have a harder time recovering from a downturn than others. The more you invest in research, the better your chances of surviving a crisis.

The strongest stocks are those of companies with strong underlying business fundamentals. These stocks won’t make you a millionaire overnight, but they’re much more likely to see long-term growth despite market volatility. The more of these stocks you have in your portfolio, the more you can potentially earn over time.

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