When is the perfect time to start investing?
Updated: May 8
Caption - Restaurant with a view, how would you like to be sitting here and your money working for you? The perfect time for investing is now.
When should you start investing? Should I invest now or wait for a downturn? Should I invest at all?
I ask myself these questions from time to time.
Almost immediately I remind myself of the age old saying, "It's not timing the market that matters, it's time IN the market that matters".
Before we start, here are some definitions -
"The Market" - S&P 500 - The 500 most powerful companies in America.
"Timing the market" - waiting for a drop in the market in order to invest, or selling before there is a drop in the market.
"Index fund" - fund that owns proportional shares of each company the index follows,
Let me try to guide you into what seasoned experts like Warren Buffett do and see if you happen to agree.
Nowadays there is so much information available about investing which I like to call "Noise". It is difficult to tell which one is the right advice for you. So what to do?
There are a few things you can and should do consistently.
Warren Buffett one of the greatest stock investors has a saying "Be Fearful when others are greedy, and greedy when others are fearful".
I try to keep it as simple as possible, I need simple things in my life. I also need to understand where I invest, for example I do not invest in crypto since I do not understand it.
I invest in an S&P 500 index fund like VOO. It is cheap (cost you 0.03%), simple as it can be done from your phone and I understand I am investing in the most successful companies in N. America.
Let me illustrate to you why I say "Time in the market" meaning how long you own your investments.
Look at this graph taken from my iPhone today, showing the S&P 500 in the past 1 month, certainly scary, there is a drop as you can see.
Let's pull back and look at the same graph for the past 1 year, not as scary, but you might say we could have waited and invest now, and you are partially right however no one has a way to predict what the market will do, not even those that went to Harvard/MIT and have big titles.
Let's pull back a bit more and go back a little more than 10 years. Don't you wish you should've invested back then? Look at the amount of growth.
This my friends, is how the rich become richer. If you or your family would have invested in 2008 when there was the meltdown and not sold, you would have by now a significant profit. Remember that the money you are investing in the stock market should be money you will not use or need in the next 5 years.
The ETF VOO is available through Vanguard. If you have an employer provided 401K find out something similar and at least invest a minimum. Shut out the noise. So when is the best time to invest? NOW.
Till next time,
Disclaimer - This blog is meant purely for educational discussion of finances. It contains only general information about financial matters. It is not financial advice, should not be treated as such. The contents of this blog are not medical advice, for medical advice please talk to your medical provider.