Should You Start Investing During the Pandemic?

You might be considering taking advantage of the volatile market by investing your savings or stimulus check.

But according to Ramit Sethi, author of I Will Teach You to Be Rich, you should invest in yourself before throwing your money into the stock market.

First, Sethi says, prioritize having a one-year emergency fund. You should calculate how much money you need for 12 months’ worth of expenses, and build up that amount in savings. (Remember, this is not simply your annual salary—you can probably continue living your life while spending less than you make.)

Once your emergency fund is built up, you can start putting any additional money into a target date fund. These funds are specially designed to grow over the long term, and change based on your age. These funds are for “long-term money”—money that won’t need for at least 10 years. The market is far too volatile right now to turn a quick profit by investing in individual stocks. A target date fund is a stable way to ensure a steady rate of return over the course of many years.

For “short-term money,” Sethi says to open a high-yield savings account. He says you are not going to make any real profit from these accounts, just know that your money is safe and you can access it when you need.

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And if you have debt, it’s best to continue your minimum payments during this uncertain time—you should focus on building up that emergency fund instead. Sethi points out that if you get laid off, or saddled with unexpected medical bills, you’ll need to access those funds in cash.

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