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Investors are gearing up for 2023 amid stock market volatility, rising interest rates and geopolitical risks. fear of recession in the new year.
But despite economic uncertainty, financial experts point to timely opportunities, urging investors to put cash into the market rather than sit on the sidelines.
Betterment CEO Sarah Levy agrees with many in the advisor community, predicting a “turbulent and volatile first half of 2023,” but optimistic about the long-term outlook.
“Over a five- to 10-year horizon, this is a golden opportunity for dollar-cost averaging,” she said during her CNBC talk. Financial Advisor Summit on tuesday.
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The strategy behind dollar cost averaging is to make your money work by investing at set intervals over time regardless of what happens in the market.
Research shows that you invest your lump sum sooner, May offer higher returnssome experts say dollar-cost averaging could help prevent emotional investment decisions.
After double-digit losses in both the stock and bond markets in 2022, it’s easy to understand why some people are hesitant to continue investing. However, according to experts, Fear of Losing Can Be Expensiveyou might miss best recovery date on the market.
According to JP Morgan’s analysis, the 10 best days in the last 20 years occurred after the 2008 financial crisis or the sharp decline during the 2020 pullback.
“Control what you can control,” Levy said, adding that automated, regular investing can help “take emotion out of the equation” when markets fall.
Opportunity to cash out as interest rates rise
Consumers are now $1.5 trillion in excess savings from COVID pandemicbut spending is 10% higher than in 2021 and ‘inflation is eating everything’ JP Morgan Chase CEO Jamie Dimon said on Tuesday CNBC’s “Squawk Box”.”
But higher interest rates have made high-yield savings accounts more attractive, Levy said. She said investors could benefit if they deposited their money in “proper institutions” where higher yields would be passed on to consumers.
“Money in a savings account is accessible capital,” Levy said. “There’s really no benefit to locking money for any kind of period.”