Trade Wars and Tariffs: Why Sticking to Your Investment Plan Matters
If you’ve been checking your Beanstox App lately, market swings could have you feeling anxious.
Trade wars, tariffs, and global uncertainty may have caused your investment account balance to go up and down more than usual. But here’s the surprising truth: market slumps often present good investment opportunities. Check out our recent blog: Stocks Slumping? Stay Sane & Stay Invested.
Why Market Ups and Downs Shouldn’t Scare You
Market ups and downs are normal. Sometimes it’s easier to look at the big picture. History shows us that despite short-term ups and downs, the stock market has a strong track record of growth over the long-term. Staying invested during uncertain times means you won’t miss out when markets bounce back.
The Power of Dollar-Cost Averaging
A smart strategy during uncertain market conditions is dollar-cost averaging, which is simply investing your money regularly, no matter what the market is doing. For example, putting $100 into an investment portfolio every month. Instead of trying to time the market (guessing the best day to buy), you spread out your purchases over time. You can use Beanstox to automate this and take the emotion our of investing and keep you on track.
Pros (why people like it) | Cons (what to remember) |
1. Reduces Stress: Don’t worry about whether today is a “good” or “bad” time to invest. You just stick to your plan. | 1. You Might Miss Out on Bigger Gains: If the market keeps going up, you would have made more by investing all your money at once instead of spreading it out. |
2. Buys More When Prices Are Low: When the market is down, your money buys more shares. When it’s up, your money buys fewer. Over time, this can lower your average cost per share. Example*: Month 1: You buy 5 shares at $20 Month 2: You buy 10 shares at $10 Total: 15 shares for $200 Average price = $13.33 per share | 2. It Doesn’t Prevent Losses: Dollar-cost averaging may smooth the ride but remember that investments can still lose value. |
3. Encourages Good Habits: Turn investing into a routine—just like brushing your teeth. This helps you stay consistent and build wealth over time. | 3. Requires Discipline: It only works if you keep going—even when the market dips and it feels scary. Don’t worry, Beanstox automated investing makes this easier. |
4. Less Risk of Buying at the Worst Time: If you invest everything at once and the market drops, you feel the full hit. Spreading out your investments could help avoid that. | 4. Can Cost More in Fees: Some Apps charge when clients place trades. Luckily, Beanstox clients simply pay their monthly subscription fee. No additional fees for investing. Learn about pricing. |
*For illustrative purposes only and are not actual customer or investment returns. Actual returns will vary greatly and depend on personal and market conditions. Past performance does not guarantee future results.
Diversified ETFs
Beanstox invests client money into Exchange-Traded Funds (ETFs). Some ETFs invest in hundreds of stocks and bonds, which can lower portfolio risk through diversification. Instead of investing in a few companies, you invest broadly across entire sectors or regions. Some Beanstox portfolios include dividend, tech and international stocks.
Traditional vs. Roth IRAs During Volatility
Both Traditional and Roth IRAs offer tax advantages, especially valuable during market volatility:
· Traditional IRA: Contributions can lower your taxable income today, which may lead to tax refunds. This can be especially beneficial during uncertain economic conditions, as lowering your tax bill leaves you with more cash to manage your finances.
· Roth IRA: While Roth contributions don’t provide tax relief right away, your withdrawals in retirement are generally tax-free, including market gains. Up and down markets may allow you to invest when stocks are cheaper. Your investments may grow and compound tax-free.
Keep Calm and Invest On
Market risk may feel uncomfortable, but remember you’re investing for the future, not just today. Keep your emotions in check, automate your investments and don’t worry about trying to time the market.
Get Started With Beanstox
Set yourself up for a better future, with the freedom and security that come from having a growing portfolio. Download Beanstox and set up your automated recurring deposits today!
