MW 'I have no debts': Is this a good time to invest in the S&P 500? I'm 66, retired and have $700K.

By Quentin Fottrell

'I own my home outright. I also get Social Security, but not much.'

Dear Quentin,

Is this a good time to invest in the S&P 500? I have about $200,000 to invest and let it roll for the next 8-10 years. I am a healthy 66-year-old woman who is married, retired and enjoying life. I have no debts, own my home outright and have another $500,000 in CDs and high-yield savings accounts that I can live on and pay my normal bills. I also get Social Security, but not much. Any advice is appreciated.

Regular Reader

Related: My $250,000 term life policy costs $2,000 a month. I'm 80. Is it time to ditch it?

Dear Regular,

Sitting on your laurels won't help your money make money in retirement.

The April slump was a good time to get in, but you can't reverse engineer space and time. Given your $700,000 in relatively liquid cash, $500,000 of which is currently in various CDs, it's a good time for you to invest, especially if you are concerned about having enough Social Security to rely upon in retirement. Otherwise, your savings will be gradually eroded by inflation. And you need it to see you through 20-plus years of retirement.

At your age, you should have roughly 50% of your portfolio on the stock market, 5% to15% in cash and the rest in bonds. The old rule was 100 minus your age, but 34% in stocks seems quite low given that people are living longer and, from what you say in your letter, you will need to rely on income from your investments in retirement. The newer 120 minus your age rule would leave you with 54% exposure to stocks.

Hopes of a trade deal and a strong corporate earnings season have buoyed markets. On Friday, the S&P 500 achieved its fifth consecutive record finish, marking the longest streak of record closing highs for the index since July 10, 2024, when the index tallied its sixth straight record close. The Nasdaq COMP also made its third consecutive record close on Friday. The Dow Jones Industrial Average DJIA also closed in positive territory.

Resilience in the face of tariffs

The S&P 500, if you believe analysts, is expected to rally before the end of the year. They're looking at a 6%-to-10% increase, depending on the forecast. David Kostin, chief U.S. equity strategist in Goldman Sachs (GS) Research, said earlier this month he expects the S&P 500 to rise by roughly 6% and closer to 11% in the next 12 months, despite concerns that President Donald Trump's tariffs will slow economic growth.

Corporate America, for the most part, appears to be resilient in the face of Trump's trade war. "In addition to the improved outlook for interest rates, the strength of first-quarter earnings results boosted our confidence that the largest stocks will sustain current investor expectations for their long-term growth for at least the next few quarters, helping support valuation for the aggregate S&P 500 index," Kostin added.

If you invested $350,000 in the S&P 500, you would have $691,622 in 10 years with a 7% return.

If you are nervous and concerned about short-term fluctuations, and don't fancy investing a big chunk of your money in one go, dollar-cost averaging allows you to divide the amount to be invested into equal-sized contributions and invest over a longer period. You are investing money not to have a great 2025, but to see returns over many years that, based on historical patterns, would be more than 7%, accounting for inflation.

With CDs, you are committing to tying up your cash for a set time period. While interest rates, which are based on the Federal Reserve's benchmark rate, can change with high-yield savings accounts even after you deposit your money, when you buy a CD, the rate does not change and you can't typically take your cash out without a penalty, which varies by financial institution. In July, you can get CD rates of up to 4.6%

There are risks to economic growth. Geopolitical threats include violent unrest in the Middle East, a war in Europe, Trump's trade war, and a Federal Reserve seemingly stymied by the conflicting signs of economic growth. Two months ago, mortgage rates briefly jumped above 7% after Moody's $(MCO)$ downgraded the U.S. sovereign credit rating from AAA to Aa1, and those rates are still hovering at 6.7%. The many recession indicators have not (yet) resulted in a recession.

Double-digit tariff hikes

Double-digit tariff hikes on major trading partners like Canada, the E.U., and Mexico are scheduled to take effect on Aug. 1, but the "fluid nature" of the negotiations makes it tough to assess the potential impact, says Charles Schwab, which has a "marketperform" on all sectors, meaning they'll perform inline with the S&P 500 SPX. "Until we have more clarity on trade policy we are cautious about asserting an outperform or underperform view on any sector."

Among the positives highlighted by Charles Schwab (SCHW): "Consumer staples companies tend to be relatively insensitive to economic activity, as consumers buy staples regardless of economic conditions." Parts of the financial sector have benefited from rising interest rates, "which allow banks to lend at higher rates and insurance companies to increase returns on collected policyholder premiums." (Although tariffs and inflation remain a risk.)

Put it this way: If you invested $350,000 in the S&P 500 today, you would have $691,622 in 10 years; that's with a 7% return and assumes that you didn't sell any stocks. You have a lot going for you: An extremely large cash cushion, half of which you can comfortably invest, a house that is paid off, good health, and the financial benefits and security of living in a two-person household. There's much to look forward to in your retirement.

With 8-10 years, you have enough runway for your investments to take off.

Related: My daughter has $500K in med-school expenses. Can my wife and I afford to pay it off?

You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter.

The Moneyist regrets he cannot reply to questions individually.

More columns from Quentin Fottrell:

My daughter has $500K in med-school expenses. Can my wife and I afford to pay it off?

Can my husband contest his late brother's $600K will? He experienced oxygen deprivation due to COPD before he died.

I have early Alzheimer's and my husband has stage 4 kidney disease. We just inherited $50K. How can this help us?

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-Quentin Fottrell

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July 26, 2025 06:30 ET (10:30 GMT)

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