In a recession, should I be investing?

Article author
Alexander G.
  • Updated

At Acorns, we believe one of the keys to investing is patience and consistency. If your financial condition, risk tolerance, and investment goals are up to date in your investor profile, then a recession may not typically be a reason to stop investing. 

As an investor, it can be helpful to know what happened to the stock market during prior recessions. History shows that the stock market has tended to decline right before and in the first half of a recession, but in many cases, they start recovering before the recession even ends. And in nearly half of all recessions in the U.S. since 1950, the S&P 500 was actually higher at the end of the recession than it was at the beginning! Past performance is never a guarantee of future results, but it can be helpful to look to history when trying to understand what’s happening today. 

For long-term investors, Dollar-Cost Averaging (DCA) is a time-tested investing strategy that can actually help you take advantage of market volatility. DCA is this easy: invest the same amount regularly (daily, weekly, monthly) over time. For example, you could invest $10 a week for a year, instead of $520 all at once. Using DCA means that rather than trying to guess the best time to invest, you invest your money in equal portions over time, at regular intervals, regardless of the ups and down in the market. You can easily use this strategy by setting up a Recurring Investment to your Acorns portfolio.

For more on what you can do when the market is down, please see these Learn articles:

  1. How to Start Investing
  2. How to Invest in a Volatile Market 

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