As the COVID-19 pandemic continues, a new variant is making waves around the world. The omicron variant was first discovered in South Africa but has been detected in multiple countries across the globe. Experts believe that if it's not already in the United States, it will be here sooner or later.
Right now, it's unclear how harmful the omicron variant is compared to the delta variant. Researchers are still trying to determine how omicron stacks up in terms of its transmissibility and severity, but it's safe to say that the new variant has many people on edge.
The stock market has also taken a tumble over the last few days, though how much that's related to the omicron variant is unclear. If the variant spreads rapidly over the coming weeks or months, however, it could potentially affect the market.
Does that mean it's time to be concerned about your investments? Here's what you need to know.
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How omicron could affect the market
COVID-19 has wreaked havoc on the economy, and the stock market saw one of its steepest declines in history in 2020 during the early stages of the pandemic. Whether we'll see a repeat of that crash as a result of omicron, though, is anyone's guess.
The stock market can be unpredictable, so it's nearly impossible to say for certain how it will react to the new variant. When the number of new COVID-19 cases spiked in July and August due to the spread of the delta variant, the S&P 500, for the most part, continued climbing.
It's important to keep in mind, too, that the stock market is reacting to countless factors at any given moment. Between the current labor shortage, supply-chain issues, and the ongoing spread of the delta variant, there are several issues besides omicron that could impact the stock market.
In other words, it's impossible to say for certain how omicron will affect the market. While we could see a downturn in the future, there's also a chance the market will continue surging. And regardless of what happens, it will be tough to pinpoint exactly what factors caused the market to move.
What does this mean for you?
In times of uncertainty, it can be tempting to withdraw your money from the stock market, just in case a crash is on the horizon. However, that can be a risky move.
If you pull your money out of the market but stock prices continue climbing, you'll miss out on those earnings. Then, if you decide to reinvest later, stock prices may have increased since you sold your investments. In that scenario, you'd end up losing money by paying more for your stocks than what you sold them for.
It can also be tempting to simply stop investing while the market is turbulent, but this poses risks, as well. Nobody knows what the future holds for the stock market, and it's impossible to say when or if a crash is coming. If you press pause on investing, you'll miss out on potential growth if the market continues thriving.
How to make the most of your money right now
The best thing you can do right now is to continue investing consistently, regardless of what the market does.
If stock prices fall, keep investing anyway -- investing during downturns can be a fantastic opportunity to buy quality stocks for a discount. If prices increase, continue investing to help your money grow as much as possible.
Also, try your best to avoid getting caught up in the market's day-to-day movements. Investing is a long-term strategy, so it doesn't necessarily matter how the market performs over days, weeks, or months. As long as you're investing in quality stocks, your investments are likely to thrive over the long term, regardless of what's happening with the market at the moment.
The omicron variant may be causing concern around the world, but that doesn't mean it needs to affect your investment strategy. By buying solid long-term stocks and holding your investments regardless of what the market does, you can give your portfolio the best chance at surviving any potential volatility.
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