I want to invest more. What should I do in today’s stock market?

Q. I’m a new investor and I use a 401(k) plan and I want to start an IRA but the market is so bad. What should I do? Maybe just keep it in the bank?

— Investor

A. The stock market is certainly volatile.

And yes, it’s a downright ugly year.

Whether you are a new or experienced investor, it’s human nature to want to wait until the market hits its bottom before jumping in, said Andrew Novick, a certified financial planner and estate planning attorney with The Investment Connection and Brookner Law Offices in Bridgewater.

“As you point out, market sentiment is currently poor and it is possible the market will go even lower,” he said. “Fear of seeing an investment lose value right after it’s purchased is a powerful force that has kept many potential investors perennially on the sidelines.”

However, he said, evidence is strong that nobody can accurately predict the market’s peaks or valleys.

“Since the market generally goes up over time and is currently quite a bit lower than it was a few months ago, getting started now seems reasonable,” he said. “I suggest focusing on the following mantra: `It’s time in the market, not timing the market.’”

He said there are a few principles to investing prudently that you should consider before taking the plunge.

First, consider asset allocation.

“Before you invest, you need to determine your investor profile,” Novick said. “This should include an evaluation of your time horizon, growth objectives, and risk aversion. When done, you’ll have a good idea of an appropriate asset allocation — how much to invest in stocks vs. bonds.”

Then, diversify so you can reduce investment risk, he said. For many investors, using low-cost exchange-traded funds or mutual funds is an easy way to build a globally balanced well-diversified portfolio, he said.

Be sure to invest regularly.

“Timing the market is difficult. Nobody knows in advance what day will be a good day or a bad day to invest,” he said. “Investing smaller amounts on a regular basis will reduce the risk of investing too much on a bad day. This approach is an excellent way to build wealth over time.”

Over time, be sure to rebalance.

When spreading your investment among different asset classes and investment categories, it is likely the account will periodically need to be rebalanced back to the original target allocations, he said.

Then you need to keep an eye on your investments.

“You should monitor the account periodically and reevaluate your investment approach and savings rate to make sure it is still appropriate,” he said.

There are plenty of online tools that can help you, but if you’re unsure, consider speaking to a financial advisor who can guide you.

Email your questions to Ask@NJMoneyHelp.com.

Karin Price Mueller writes the Bamboozled column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com’s weekly e-newsletter.

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