27% of Americans Plan to Invest More in 2023. Should You?

A man sits and reads the latest crypto news while his girlfriend reads in the background.

© Getty Images
A man sits and reads the latest crypto news while his girlfriend reads in the background.

It’s more than fair to say that 2022 was a very volatile year for the stock market. So not surprisingly, some people may not be so eager to pump extra money into their brokerage accounts in 2023.

But according to New York Life’s latest Wealth Watch survey, among people who already have some money invested in the stock market, 27% are planning to invest more in 2023. Whether you should do the same, however, depends on your personal financial situation.


Load Error

Can you afford to invest more this year?

If you can afford to pump more money into stocks, ETFs, and other investments this year, great. The more time you give your money to grow, the more wealth you stand to accumulate.

But if money is tight and you’re barely paying your bills on time, then investing more in 2023 probably isn’t so feasible. One thing you definitely don’t want to do is land yourself in debt because you pumped too much money into stocks and other assets. So before you make the decision to invest more, assess your ability to cover your regular bills in light of inflation.

Are there other financial goals you should be tackling first?

Investing your spare cash is definitely a smart thing to do. But before you pump additional funds into your brokerage account, make sure you’re doing well enough on emergency savings, and you aren’t carrying high-interest debt, like credit card debt.

You should, for example, have enough money in your emergency fund to cover at least three full months of essential expenses. So if you normally spend $2,500 a month on essential bills, your emergency fund should, ideally, have at least $7,500 in it. If you only have a $3,000 emergency fund, then you shouldn’t invest until you’ve added another $4,500 to that account at a minimum.

Similarly, let’s say you owe $3,000 on your credit cards, which are charging you an average interest rate of 19%. Even if you’re a really shrewd investor, you may not generate nearly that high a return in your brokerage account. So it makes sense to knock out your high-interest debt before investing your money.

Look at your whole financial picture

The idea of investing more in 2023 might seem appealing, especially because the stock market hasn’t yet fully recovered from the turbulent events of 2022. That means there are still bargains to be scooped up.

But before you put more money into different investments, take a look at your financial picture. If you’re managing your bills well, have a fully loaded emergency fund, and have no high-interest debt to your name, then by all means, invest more this year than you did in 2022. But if you’re having a hard time covering your ongoing expenses, your emergency fund clearly needs work, and you’re still carrying a nagging credit card balance, then it pays to address those issues — and resolve them — before pumping more money into your brokerage account.


Our best stock brokers

We pored over the data and user reviews to find the select rare picks that landed a spot on our list of the best stock brokers. Some of these best-in-class picks pack in valuable perks, including $0 stock and ETF commissions. Get started and review our best stock brokers.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

Continue Reading