Are You Still Investing While the Stock Market is Rising? 1 Good Reason You Might Want to Press Pause.

The stock market has been improving since it first entered a new bull market in October 2022. S&P 500 (SNPINDEX: ^GSPC) It is up nearly 67% as of this writing, and many investors are hopeful that this trend will continue into 2025 and beyond.

The average S&P 500 bull market since 1929 has lasted more than 1,000 days (or just under three years), with some lasting much longer. For example, the bull market following the Great Recession lasted nearly 11 years. So it’s plausible that the current surge still has a lot of time left before it faces another downturn.

However, the market can be unpredictable. While no one can predict with certainty where stock prices will go in the near future, there’s a good reason you might want to hold off on investing right now.

Image source: Getty Images.

Do you have an emergency fund?

Although it may seem counterintuitive, building a solid stash of supplies emergency savings Outside of the stock market, it can help you protect your investments and overall financial health.

Theoretically, if the stock market takes a turn for the worse, you won’t actually lose any money as long as you keep your money invested and avoid withdrawals.

For example, let’s say you invested in a stock at $100 per share, and during the market crash, that stock fell to just $80 per share. You will lose $20 valueBut you don’t actually lose any money unless you sell. If this stock eventually returns to $120 per share, selling at that point will net you a $20 profit.

In other words, even if the market crashes in the relatively near future, you can ride out the storm by keeping your money invested. But if all your money is tied up in the market and you face an urgent expense, you may have no choice but to withdraw your money and sell it at a loss.

There is no way to know exactly when the next crisis will occur. But it’s incredibly important to keep at least three to six months’ worth of savings in an emergency fund separate from the stock market. This way, if you are faced with an unexpected cost, you can leave your investments alone without risking a loss by selling after prices drop.

Another big risk factor to consider

If you already have a solid emergency fund, another reason you might hold off on investing is because you haven’t checked your portfolio in a while.

Not all stocks are sound investments, and things can change over time. Maybe a stock you bought years ago was a great buy at the time, but the company has been in decline recently and may no longer be a strong investment.

Everything from management changes to changes in industry trends can signal that owning a stock is no longer wise. It’s now more important than ever to double-check that each stock in your portfolio belongs there. Otherwise, if the market takes a turn and you suddenly realize you need to sell some of your investments, you may be forced to sell at a much lower price.

equally important research new stocks you are thinking of buying. Now may be a smart time to invest if prices continue to rise, but it can be difficult to distinguish between healthy stocks and stocks that appear to be thriving solely due to general excitement in the market. By examining a company’s fundamentals rather than relying solely on market performance, you can ensure you’re buying solid stocks that are more likely to survive future volatility.

The market may be rising, but it’s more important than ever to keep a clear mind when investing. While it’s a smart idea to stay invested right now, double-checking that you have a solid emergency fund and are invested in healthy stocks will protect your portfolio as much as possible.

Don’t miss this second chance at a potentially lucrative opportunity

Have you ever felt like you were missing out on buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our team of expert analysts publishes a report. “Double Down” stock Advice for companies they think are about to implode. If you’re worried that you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: If you invested $1,000 when we doubled down in 2009, You would have $368,053!*

• Apple: If you invested $1,000 when we doubled down in 2008, You would have $43,533!*

• On Netflix: If you invested $1,000 when we doubled down in 2004, You would have $484,170!*

We’re currently issuing a “Double Down” warning for three incredible companies, and another chance like this may not come anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of November 25, 2024

Katie Brockman It has no position in any of the stocks mentioned. The Motley Fool has no position in any stocks mentioned. The Motley Fool has a feature disclosure policy.