Is the economy going to tank any time soon? Should I start investing for the first time now?

Question

I have heard from several individuals that it is only a matter of time before the economy tanks and that we are about to enter a economic depression. I am a college student and really want to start investing some of my cash in either precious metals and stocks... is now a good time to do it? Do you think the economy will tank in the foreseeable future?

Answer 1

The ecomony is very strong now. The best time to invest is as soon as possible. But you have to be smart about it and not jump in head first. Here's an easy 9 step program for you to consider...
1.Begin today: No matter what your age, the time to start saving for retirement is now. Decide today and commit to it. The longer you postpone saving for retirement, the more difficult it will in your later years
2.Start saving any amount: The amount you start with really doesn't matter. It's the process of placing money aside for retirement that is the important habit you want to establish. Choose as big an amount that you feel comfortable setting aside.
3.Choose a method: If your company offers a 401(k) and matches a portion of your contributions, opt for it and set a goal of reaching the amount of the match. If your company doesn't offer a 401(k) plan, save money in a standard IRA or Roth IRA
4.Make it monthly: Get in the habit of making a payment to your retirement on a monthly basis -- just like any other monthly bill you pay. It's a bill for your retirement
5.Make it automatic: Once you have committed to saving for retirement, make the savings automatic
6.Be aggressive: Make sure that the amount you are saving is placed into an account that is aggressive, especially in your younger years. You want to earn an interest rate that is well above the inflation rate. Stock funds are much more likely to achieve this goal than money market accounts.
7.Establish a goal: Once you have established an account and are contributing to it on a monthly basis, make a goal of when you'd like to retire. You can use this calculator to help you figure out how much you will need to contribute to reach your goal.
http://finance.yahoo.com/calculator/retirement/ret-02
8.Don't get discouraged: Your retirement goal probably is not possible with your current retirement contributions. Don't be discouraged. It will take time to build up the amount you contribute, and it won't happen overnight.
9.Brainstorm ways to increase contributions: There are a number of ways that you can either save or earn extra money to add to your retirement savings. Take the time to think of ways that you can increase the amount of your contributions to reach the retirement goal you have. While this will entail effort today, it will be well worth the reward when you reach retirement.
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Answer 2

There is no doubt that the US economy is going to tank soon. Maybe other parts of the world is different. All the numbers that you have been hearing were "cooked up" to sound rosy. The fact that there is "no inflation" is a myth. Did you spend less for you cars, insurance, gas, clothes, drinks, foods, housing than last year?
Everything goes up in price. Wages can no way keep up with the price increases. Its only a matter of time, which will definitely come one day, people will stop spending and the economy will shrink. Bottom line is, invest in foreign stocks and currencies.

Answer 3

It could. That is a possibility. It also may not. That is also a possibility. You are really going to have to decide for yourself. One thing to keep in mind is that you do not have to invest in stocks that are U S economy based. You can invest in stocks that are based on other economies also. I may be incorrect in this statement, but I believe that almost every other stock market in the world outperformed the U S stock market these last couple of years with maybe the exception of Japan. But I believe that last year it even out performed the U S stock market. On that basis the U S stock market has some catching up to do. On the other hand, the U S economy has exported all of its jobs to foreign countries and imports a heck of a lot of its goods from foreign countries. maybe that is why the foreign stock markets are outpeforming the U S stock markets, especially China and India. You can invest in the stocks of those two countries.

Answer 4

There's no way to tell, really...

Remember that you'll ALWAYS be able to find someone who thinks the stock market is about to crash (there's an old wall street joke about stock market analysts predicting 34 of the last 5 recessions). Unfortunately some times those persons will be right. The market has gone up quite a lot over the last year, and part of me says that its time for it to go down for a while (though mean this in terms of it shedding a couple of percentage points over a few months or a year as opposed to crashing). However stocks aren't trading at unreasonable prices (as they were during the last crash in 2000) and over the long term I think that if you get in now you should do pretty well.

Answer 5

Research (see papers by Campbell Harvey for details) shows that whenever the yield curve has inverted, it is followed by a recession within three to five quarters.

By the "yield curve inverting" I mean that the five year treasury bond has a lower yield than the three month T-Bill. Some papers talk about this phenomenon not being a good predictor -- but those articles are looking a the difference between the two year and the ten year.

The inversion of the 3-month vs the 5-year has been a perfect indicator historically.

For much of the last year, the yield curve has been inverted. It just recently went back to its "normal" state. If history is right -- there will be a recession some time next year.

Answer 6

Most humans cannot tell the future. The only method is to watch what is going on with your investments and make the appropriate changes i.e. keep your losses small and let your winners ride. Watch the ETF for precious metals and for the stock sectors you are interested in. Buy when the price goes up on volume and sell when they start loosing their momentum. Read/learn about technical analysis of the stock market. Best of luck to you. Having luck is executing with a prepared mind.

Answer 7

lord i hope you are wrong on that. if you are right i would wait untill the number of stocks hitting 52 week lows out number the stocks making 52 week highs on all 3 exchanges. i usually use that as my major buying point.


happy investing