In this column, which appears every two weeks, we give you specific suggestions on how you can invest your money in the stock market.
It is not easy to decide to invest again in the stock market after living through a difficult year like 2022, especially since the predictions for 2023 are contradictory to say the least!
“Things have to get worse before they get better,” JP Morgan chief strategist Marko Kolanovic told CNBC on Tuesday. He forecasts the United States’ flagship index, the S&P 500, to fall 10% in the first half of the year.
Another prominent Wall Street analyst, Fundstrat’s Tom Lee, said Monday that investors had underestimated the positive impact of slowing inflation. His prediction? A surge that could reach 25% for the S&P 500 in 2023.
So who do you believe? “Conflicting messages are part of the reality of the market. There are those who say that when markets go up it’s too expensive and when markets go down the worst is yet to come… Cimon Plante, portfolio manager at National Bank Financial.
“If you stay fully invested, you will participate 100% on the downside and 100% on the upside, which will give you a decent return,” he adds. Trying to predict market movements means exposing yourself to the risk of missing out on the good days that make all the difference. And if the past three years have taught us anything, it’s that you can’t predict the future or market movements. »
Consistency pays off
Which brings us to the good old strategy of investing by regular payments, better known as Dollar Cost Averaging (DCA). Described for the first time in Benjamin Graham’s famous book The Intelligent Investor, published in 1949, it aims to counteract market volatility.
“Sometimes we try to complicate our lives because we believe that if the best strategy is the simplest, we will be able to beat the markets. It must always be constant, investing regularly and trying to lower its average cost while remaining in the market, regardless of fluctuations,” summarizes Youcef Ghellache, founder of Educfinance and professor of finance at the Collège Montmorency.
If you’re looking to get into regular investing, experts recommend quality stocks like established company stocks or diversified funds. The strategy is particularly advantageous with a broker who does not charge any commission for stock exchange transactions (Banque Nationale Courtage Direct, Disnat, Wealthsimple) and for mutual funds without closing costs.
However, with interest rates rising, there are other options that may be more attractive depending on your personal circumstances, Ghellache points out:
- Loan or mortgage repayment
- Put your money in a high interest account or GIC
- Invest in bonds
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