A bull market refers to an extended period of time wherein the stock market is rising. As this happens, your money is growing! Typically, to have a bull market stock prices need to rise by 20% after there have been two declines of 20%.
The characteristics of a bull market are usually characterized by optimism, investors’ confidence, and expectations that strong results should continue for an extended period of time. These markets generally take place when the economy is strengthening or is already strong; the gross domestic product (GDP) is strong; there’s a drop in unemployment; and corporate profits are rising. Investors will drive up the demand for stocks. The stock market will climb, as it is fueled by investor confidence.
Many would think that this is the perfect time to invest. However, during this time, it will cost you more for each share of stock that you buy. Remember the old adage, “Buy low, sell high” is very true during a bull market. But you don’t necessarily want to cash-out of your stocks either. While you will make a profit during a bull market, your money will stop growing, as you no longer have stocks. Investing is long-term. Your investments should be held until you are ready to retire.
At that time, you can start withdrawing from your earning. Take money from the growth of your investments (dividends) and not the principal (your investments). The dividends will help you enjoy a great retirement, provided you have invested wisely. your stocks/funds have grown, and you have not sold them prior to retirement.