Should You Keep Investing During a Recession or Market Crash? (Yes. Here's Why.)

The S&P 500 has survived World War II, the Korean War, the Vietnam War, the 1973 oil crisis, the 1987 Black Monday crash, the Gulf War, the dot-com bubble, 9/11, the 2008 financial crisis, the 2020 COVID pandemic, and the 2022 inflation spike. After every single one of these events, the market eventually recovered and hit new all-time highs. Not once has the US stock market failed to recover from a crash. The average bear market lasts about 9 months. The average bull market lasts about 2.7 years.

Studies from J.P. Morgan show that missing just the 10 best trading days over a 20-year period cuts your returns nearly in half. The problem is that the best days almost always happen right after the worst days, during the very moments when scared investors are sitting on the sidelines. If you invested $10,000 in the S&P 500 from 2003 to 2023 and stayed fully invested, you'd have roughly $64,844. If you missed the 10 best days, you'd have $29,708. That's a $35,000 penalty for trying to time the market.

The outbreak of the Gulf War in 1990 caused the S&P 500 to drop 19.9%. Within a year, it had fully recovered. After 9/11, the market dropped 11.6% in a single week, then rallied 21% over the next 12 months. When Russia invaded Ukraine in February 2022, the market dipped but finished the year down only 19% before roaring back 24% in 2023. Gold and oil spikes feel alarming, but they're temporary shocks. A diversified portfolio recovers from them reliably.

Dollar-cost averaging, investing a fixed amount on a regular schedule regardless of market conditions, is the single most effective way to handle uncertainty. When the market drops, your regular contribution buys more shares at lower prices. When it recovers, those extra shares amplify your gains. You don't need to predict wars, oil prices, or Federal Reserve decisions. You just need to keep investing. An investor who put $500/month into an S&P 500 index fund from January 2000 through December 2023, through the dot-com crash, the financial crisis, COVID, and the 2022 bear market, turned $144,000 in contributions into approximately $470,000.

Gold is often sold as a safe haven during crises. And it does spike during moments of fear. But over long periods, gold dramatically underperforms stocks. From 1972 to 2023, gold returned about 7.7% annually, compared to 10.5% for the S&P 500. That 2.8% annual difference, compounded over 40 years, means stocks would have turned $10,000 into roughly $450,000 while gold would have turned it into $190,000. Gold has a place in a diversified portfolio (typically 5-10%), but it should never be your primary investment strategy.

The headlines will always be scary. There will always be a reason not to invest. But the data is overwhelmingly clear: investors who stay consistent and keep dollar-cost averaging through every crisis come out dramatically ahead of those who try to time the market. Set up automatic contributions, invest in a low-cost S&P 500 index fund, and resist the urge to react to the news cycle. Your future self will thank you.