However, in the long term, the prospects for recovery seem relatively good. The stock market has always produced a successful turnaround against bear markets. And, at age 50, you will probably have enough time available before retirement to know the recovery of the stock market.
As such, it may be time to buy a stock selection to increase your chances of a comfortable retirement.
Buying stocks today over a period of one year can result in significant losses for an investor. Depending on how the spread of the coronavirus continues, the stock market may experience further declines in the short term.
However, at age 50, you will probably be at least ten or fifteen years before you retire. Over such a period, the stock market will likely have enough time to fully recover from its current challenges.
Therefore, buying stocks today and keeping them for the long term might be a good decision. It can allow you to take advantage of low valuations for high-quality companies, which leads to above-average returns on capital for your portfolio.
Prospects for recovery
At the moment, a market recovery may not seem very likely. Investor sentiment is weak and the coronavirus appears to have a substantial impact on economic growth.
However, past bear markets have often shown similar traits. For example, during the financial crisis, it was sometimes difficult to see how the serious challenges facing the banking sector would be resolved. Likewise, other bear markets have left investors struggling to see how a recovery is possible.
The stock market, however, has always delivered a successful recovery from its past crises. A mix of policy changes, such as quantitative easing, and the resilience of the world economy is very likely to produce a similar recovery in the years to come. Therefore, if you have a long-term horizon, current low supply valuations could be an opportunity to build a portfolio before a potential recovery.
Buying cheap dividend stocks today could lead to high long-term returns, which boosts your retirement prospects. It is, of course, very important that you buy a range of companies that together offer a high degree of diversity.
It is currently unknown which industries will suffer the most from the impact of the coronavirus. It makes sense for investors to buy companies operating in different geographic areas and industries in order to reduce their dependence on a specific industry or location. This will help reduce your risk and may even allow you to further capitalize on the stock market outlook to improve your financial outlook in old age.