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

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Investing more could work to your benefit — if you can afford to do so. 

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.

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.

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