Should You Invest in Stocks in 2026? History Shows a Long-Term Upside

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  Published in Stocks and Investing on Tuesday, December 16th 2025 at 3:46 GMT by The Daily Overview
      Locale: UNITED STATES

Should You Invest in Stocks in 2026? What History Tells Us

The question “Should I buy stocks in 2026?” is one that pops up on every investor’s mind, especially when headlines keep warning of a looming recession, surging inflation, or a possible market correction. The answer, according to the data, is not a simple yes or no. It’s a nuanced “long‑term yes, but only after you’ve weighed the risks and set up a disciplined strategy.” Below is a synthesis of the key points from the MSN Money article, “Should you invest in stocks in 2026? Here’s what history shows,” plus a few additional resources linked in the piece for extra context.

1. A Quick Glance at the Numbers

The article starts with the obvious: history is the best teacher of stock‑market outcomes. The S&P 500, which is a proxy for the U.S. equity market, has delivered an average annual return of about 10 % (including dividends) over the last 90 years. That’s an 8–10 % real (inflation‑adjusted) return when you account for the average inflation rate of roughly 3 %. Over the last 30 years, the CAGR has hovered around 7 % to 8 %. These numbers are the backbone of the article’s central thesis: if you invest early and stay invested, the market’s long‑term track record is favorable.

The article also links to a Macrotrends chart that traces the S&P 500’s performance back to 1926. That visual reinforces the point: while there are bumps, the overall trend is upward. The “drawdown” period (the largest fall from a peak to a trough) in the chart is a vivid reminder that short‑term volatility is normal.

2. The Ups and Downs That Matter

2008 Financial Crisis

During the Great Recession, the S&P 500 fell 37 % from its peak in March 2009 to the low in March 2009, but it fully recovered within two years. The article quotes a Vanguard study that stresses the importance of a “long‑term horizon” because the recovery was quick relative to the 200‑plus‑day dip.

2020 COVID‑19 Crash

The market’s 2020 collapse was even steeper—an 34 % plunge in March 2020. Yet it rebounded to record highs in just a few months. The article cites an interview with an economist on CNBC (linked within the MSN piece) that explains how aggressive fiscal and monetary stimulus, along with low borrowing costs, accelerated the rebound.

2022–2023 Inflationary Shock

The most recent volatility was tied to a surge in inflation, a sharp rise in U.S. Treasury yields, and the Fed’s “tighter‑money” policy. In 2022, the S&P 500 fell roughly 18 % from its June 2022 peak, before turning sideways for most of 2023. The article notes that the stock market has historically weathered high‑inflation periods—the 1970s example of the 1973–1975 oil shock shows the market ultimately finished 9 % higher over 20 years.

3. Why the Current Environment Is a “Risk‑Adjusted” Opportunity

The article then tackles the modern backdrop: interest rates, inflation, and valuations. It highlights that:

• U.S. Treasury yields rose from 0.3 % in early 2022 to above 4 % by early 2024. Historically, this level of yield is not unprecedented; the 1980s and 1990s had similar rates yet the equity market still rose.

• Inflation has averaged 7 % since the 1970s, which is high, but not the highest in the past 100 years. The article stresses that equities are a hedge against inflation, because businesses can often pass rising costs to consumers.

• Valuations (the price‑to‑earnings ratio of the S&P 500) were near 20x in early 2024—a level historically associated with a 10‑ to 15‑year “average” return. The article links to a Morningstar article that explains the “price‑earnings‑to‑growth” (PEG) ratio and how it can help gauge whether a market is overpriced.

The overarching message is that while current conditions introduce risk, they are not a barrier to long‑term gains. The article even cites a Bloomberg study (link provided) showing that equities outperformed bonds in 2020, 2021, and 2022, despite a rising interest‑rate environment.

4. Putting It All Together: What History Suggests for 2026

The piece’s core argument is that, if you’re planning for a 10‑year horizon or longer, 2026 is a reasonable time to buy. The logic is simple:

1. Past performance suggests resilience: Even after major downturns, the market tends to bounce back and continue its upward trajectory.

2. Current conditions are not unprecedented: The combination of high inflation and rising rates has been seen before, and equity markets have survived and eventually prospered.

3. Timing the market is futile: The article references a CNBC‑featured statistic that 70 % of “market timers” end up losing money over a 20‑year period.

4. Diversification mitigates risk: The article links to an MSN Money guide on “Diversifying your portfolio” that explains why a mix of large‑cap, mid‑cap, and international equities, plus a touch of bonds, can smooth out volatility.

5. Cost‑effective investing matters: A long‑term index fund strategy (e.g., Vanguard’s S&P 500 ETF) keeps fees low, which compounds over decades. The article cites a Fidelity report linked within it that shows the impact of a 0.05 % fee difference over 30 years.

5. Practical Steps for 2026

The article ends with actionable recommendations, many of which reference other MSN Money pieces for deeper dives:

• Start with a clean‑sheet plan: Use the “My Money Plan” tool on MSN to map out your goals, risk tolerance, and expected cash flows. The link points to a step‑by‑step guide.

• Automate contributions: Set up automatic transfers to a brokerage account to buy low‑cost index funds regularly. The article includes a link to an article on “Automatic investing” that compares direct index fund purchases versus robo‑advisors.

• Rebalance annually: A 5 % swing rule is suggested. If your equity allocation drops below 80 % or climbs above 90 %, rebalance by selling or buying accordingly. The piece links to a Vanguard article explaining the science behind rebalancing.

• Stay informed, not reactive: Subscribe to newsletters that provide macro‑economic context (e.g., the “MSN Money Market Update”). The article recommends keeping an eye on key data releases such as CPI and Fed minutes but stresses not reacting to every headline.

• Consider tax‑advantaged accounts: If you’re eligible, invest through an IRA or 401(k) to get a tax break. The MSN Money “Tax‑efficient investing” article linked in the piece explains the benefits of Roth versus Traditional accounts.

6. Bottom Line

History favors long‑term equity exposure, even in a 2026 world of rising rates and inflation. The key takeaway from the MSN Money article is that the market’s long‑run positive return makes it an attractive option for those who can afford a multi‑decade commitment. However, the article doesn’t shy away from caution: short‑term volatility is real, and investors should diversify, keep costs low, and remain patient.

If you’re planning to invest in 2026, the article urges you to focus on your time horizon, not the current headline. Use the provided links to dig deeper into valuation metrics, risk management, and cost‑efficient strategies, then set up a disciplined investment plan that leverages the market’s historical resilience.

In essence: Investing in stocks in 2026 can be a wise decision if you view it through the lens of long‑term growth, not short‑term noise.