Investors are making lots of money as the stock market keeps going up and up.

  • It's a good time to be in stock market, experts say
  • Only 54 percent of Americans in the stock market
  • 'Dollar cost averaging' best way to invest

“It’s fabulous,” said investor Sandy Lopez, who has money in an IRA and 401(k). “I’m crossing my fingers that it’ll stay that way, but it’s not going to last forever.”

That’s true, but the outlook for 2018 is good. Veteran investment planner Chris Redhead, regional vice president for Sequoia Financial, said he expects the recent corporate tax cuts to help drive a good year ahead.

“Companies are doing well, employment is in good shape, and inflation is well in tack. It’s a good time to be in the market,” Redhead said.

With the market so hot, folks like Carlos Cabra are thinking long and hard about whether it’s time to take the plunge and invest.

“I’m 50/50 right now,” Cabra said about trying to decide whether he should get in.

Many Americans not invested

According to a Gallup survey, only 54 percent of Americans are in the stock market — either through individual stocks, mutual funds, pensions or retirement plans, like 401(k)s.

That leaves a big chunk of the population not invested.

“Aren’t they kicking themselves?” Redhead asked. “Just look at returns from 2017,” he added. “If you had money in the bank, you were making — what? .4 to .5 percent. In the market, the average investor made double-digits.”

Given the positive outlook he sees for 2018, Redhead said it’s not too late for folks on the sidelines to get in, but only if they can afford to leave their money in for 18 months or longer.

“You should be in the market, but you have to have a long-term view,” he said.

How to invest

The best way to invest, especially for those just getting started, is something called “dollar cost averaging.” That’s gradual investing over time, whether the market is going up or down.

It’s important to resist unrealistic expectations that you can get rich quick by playing the market.

“Please don’t try to time the market,” Redhead cautioned. “In most cases people can’t do that successfully.”

Investor Becca Collins said she sticks by that philosophy. She’s staying the course with her money in the market, even though she’s worried about a possible bubble.

“I’m not pulling out. I’m still pretty young, so I’m playing a long term game,” Collins said. “Whatever I have in right now, it’s going to ride the boom up, and it’ll ride whatever recession down.”

It’s also important to diversify what you invest in. Spread the risk by buying index funds, exchange traded funds or mutual funds, which are pools of similar stocks, instead of just individual stocks from one company.

“Instead of buying one stock, you buy 300 or 400 stocks,” Redhead said. “So, in case one stock goes bad that you invest in, not all will. The chances of all of them going bad are slim.”

Risk of correction

There is a lot of nervousness out there right now, given memories of the great recession of 2008, where the average investor lost more than 30 percent, but Redhead says don’t let that paralyze you.

“There’s a lot of negativity out there, so people get scared and what do they do? Nothing. That’s missed opportunity,” he said.

Matching the 20 percent plus returns of 2017 might be tough, but most experts are not expecting anything like 2008.

“We’re solid heading into 2018. Corrections are going to happen. It’s not necessarily a bad thing,” Redhead explained. “A correction is typically falling by 10 percent. We may have a correction. We may have a dip, because people are nervous in the short-term, but in the market, you should be in the market for the long-term.”

No one really knows if the market will go up or down tomorrow, next week or next month.  But over the long term, most people who regularly invest in the market — regardless of the headlines — come out ahead. Gradual, consistent investing over time is the best way to make money in the market.