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When is the Right Time to Invest?

I am often asked, "When is the right time to invest?" I think investors ask that question because while they know they cannot control the market; they also know they can control when they enter and exit the market. It is natural to feel like we can control our investments by deciding when to buy and sell. Everyone is tempted to do this. However, whether you are a beginner investor wondering when you should start investing or an experienced investor wondering whether you could be doing better with a more hands-on approach, the reality is the same.

The belief that one can time the market and know what it will do tomorrow is false. No one can time the market (no matter what they tell you!) and therefore, the best time to invest is now. Some people end up procrastinating, thinking they can find just the right time to invest while in the meantime they are simply missing out on gains (and yes, losses) on their investment. Warren Buffett said, "You're making a terrible mistake if you stay out of a game that you think is going to be very good over time because you think you can pick a better time to enter it." Rather than waiting for the perfect time, invest now.

Once you have started investing, it is important to maintain a long-term perspective. If you invest and the market takes a downturn, stay the course, knowing that it will eventually recover. Indeed, according to an analysis on rolling period returns, since 1979, the returns on 20-year rolling periods ranged from 6.4% to 18%. Warren Buffett also said, "I know what markets are going to do over a long period of time: They're going to go up. But in terms of what's going to happen in a day or a week or a month or a year even, I've never felt that I knew it and I've never felt that was important." Ignore the ups and downs of the market and remain confident that your well-diversified portfolio will grow over time. Another key is to invest regularly and consistently. The advantage of this approach is that you are averaging out the ups and downs of the market which may help you feel better than if you were trying to jump in and out.

The only caveat I would add to my advice is in the case that you are intentionally not invested for the long-term. Say, for example, you are saving for a down payment on a house or to buy a car. In that case, I would recommend that you invest your savings, but I would advise you to use more conservative investments such as money market funds or short-term bond funds. These funds provide shelter from volatility in the stock market and scheduled interest payments which works well for short-term goals. The time to invest for short-term goals is still now, but based on the time frame of the investment, the strategy may be different than if you were invested for the long-term.

When it comes to the stock market, timing is nothing, but time is everything. No one can consistently time the market, but the longer you are invested, the more opportunity you have to grow your savings over the long-term. So, don't wait. The right time to invest is now.

If you have any questions about investing or are wondering how you can get started, I would be happy to meet with you for a no-cost consultation. You can e-mail me at gleest@wtwealthmanagement.com or call (928) 225-2474.

Sincerely,
Glenn Leest

Gleen Leest


References:

Anspach, Dana.
The Best and Worst Rolling Index Returns 1973-2016.
The Balance. June 9, 2018.





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