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Ask an Advisor: ‘I’m Strictly Into Bonds’ and Afraid of the Stock Market. Is This a Strategy I Should Stick With?


I’m afraid of the stock market. With my first investment, I lost 60% of my money. So I’m strictly into bonds. With interest rates low, what’s your advice? Should I stay or try something else?


It’s reasonable to be nervous about the stock market, especially given its ups and downs over the past few years. And it’s even more understandable when you’ve had a bad experience and lost money.

Still, you want your money to work for you, and the prospect of big returns is enticing. So should you keep playing it safe and accept the slow and steady pace of bonds? Or should you take some risk with the hope of better returns in the stock market? Here’s how to think through this decision. (And if you need help managing your investment portfolio, consider working with a financial advisor.)

Nobody Can Time the Market

Ask an Advisor: 'I'm Strictly Into Bonds' and Afraid of the Stock Market. Is This a Strategy I Should Stick With?

I can’t tell you whether putting your money into the stock market today will pay off.

Over short time periods, the stock market is unpredictable. Anyone who tells you that they know the future is not someone you should trust.

The only way to make these decisions is by examining what the data says is most likely to pay off over the long run. And if you take a diversified approach to investing in the stock market and stick with it, the data says that you are likely to be rewarded over the long term.

From 1926 through 2023, the S&P 500 experienced negative returns during only a handful of 10-year periods. All of those periods included either the Great Depression or both the 2000-2002 dot-com bubble and the 2007-2008 global financial crisis. Every other 10-year period produced positive returns.

And the results are even better when you look at longer time frames.

Every 20-year period from 1926 through 2023 saw positive returns from the S&P 500, with almost 90% of those periods producing annual returns of 7% or higher. For 30-year periods, the lowest average annual return was 7.8%. (If you need help managing your investment portfolio, consider working with a financial advisor.)

Focus on Your Goals and Comfort Level

Ask an Advisor: 'I'm Strictly Into Bonds' and Afraid of the Stock Market. Is This a Strategy I Should Stick With?

Before you decide to invest in the stock market, it’s important to remember what you’re trying to achieve.

If this money is for an emergency fund, home purchase or a short-term goal, the stock market may not be the right tool. It’s generally too unpredictable over short periods.

If this money is meant to support a longer-term goal, such as retirement, the stock market can be a great tool. Even in retirement, when your time horizon is shorter, the returns provided by the stock market often play an important role in ensuring that your money lasts a lifetime.

Your personal preferences matter here. Some people are comfortable riding intense market gyrations while others are not. Your comfort level should be a part of your decision-making process. (If you need help managing your investment portfolio, consider working with a financial advisor.)

The key is to find the right balance. The question is rarely whether you should put all of your money into the stock market or keep all of it out of the stock market. Instead, it’s about finding the right balance between stock market returns and the stability offered by bonds and cash.

Finding an Appropriate Asset Allocation

Your asset allocation is the percentage of investments kept in stocks, bonds and cash. For example, you might put 60% of your investments into the stock market and 40% in bonds, with an emergency fund on the side. That kind of portfolio would allow you to reap the benefit of growth from the stock market while maintaining stability during down periods.

There’s no one perfect asset allocation. I tell my clients that there is typically a range of “good enough” and that our job is to choose a portfolio that falls within that range.

Here are the steps to determine the right asset allocation for you:

  1. Accept that there is no way to know whether right now is the best time to invest in the stock market. It may be a great time, but you could temporarily lose money too.
  2. Write down your financial goals. Let those goals guide your decision about chasing any particular return.
  3. Be honest about your comfort level with risk. It may be good to push yourself a little outside of your comfort zone to get past some of that fear that you feel. But it’s also smart not to push yourself too far and risk selling out the next time the market starts falling.
  4. Choose an asset allocation that strikes the right balance between risk and return based on your goals and comfort level.
  5. Implement that asset allocation, stick with it through the ups and downs and trust that your patience will be rewarded.

Next Steps

Investing in the stock market doesn’t have to be an all-or-nothing proposition. Review your financial goals, risk tolerance and time horizon to help determine the right asset allocation for you.

Tips for Finding a Financial Advisor

  • Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Consider a few advisors before settling on one. It’s important to make sure you find someone you trust to manage your money. As you consider your options, these are the questions you should ask an advisor to ensure you make the right choice.

Matt Becker, CFP®, is a SmartAsset financial planning columnist and answers reader questions on personal finance and tax topics. Got a question you’d like answered? Email and your question may be answered in a future column.

Please note that Matt is not a participant in the SmartAdvisor Match platform, and he has been compensated for this article.

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