Is Now a Good Time to Invest?…

It’s About ‘Time in’ the Market, Not ‘Timing’ the Market

There’s a misconception that investing is about trying to time the market. This means buying when prices are low and selling when they’re high. But no-one can know for sure what the markets are going to do.

Rather than trying to time the market, it’s better to focus on time in the market. Most investments are described as a medium to long-term commitment. That’s because the longer you invest, the greater your potential for making a profit. You should aim to invest for at least 5 years.

Historically, markets tend to rise over time. There will be short-term fluctuations and even some losses along the way. But if you have an easy-access emergency fund to cover any unexpected costs or your short-term income needs, you'll be less likely to have to sell your investments during a downturn and you’ll be able to give your investments time to recover from any losses.

Making Your Money Go Further

Savings accounts are generally seen as the safest way to save. However, interest rates can go up or down. When interest rates are low, the rate of interest you earn on your savings might be less than the rate of inflation. This means the money you save buys you less over time.

If you don’t need to access your money for 5 years or more, investing provides greater potential for beating inflation than savings do. Keep in mind though, no investments are without risk. But in return for a certain degree of risk, you get the opportunity to make your money work harder.

Making The Ride Less Bumpy

When you invest, the value of your investment will change in response to what’s happening in the markets. These short-term fluctuations are a normal part of investing.

One way to make the ride less bumpy is to diversify. This is when you put your money in a range of different areas, rather than just one. The idea is that losses to one investment could be offset by gains to another. It’s more commonly known as ‘not putting all your eggs in one basket’.

The good news is you don’t have to be an expert investor to diversify. You can do it by buying into a ready-made portfolio. Also known as multi-asset funds, these types of investments are designed to stay within your chosen level of risk but to spread the investment far and wide.

Making It A Habit

Another way to help beat volatility in the market is to invest some money each month. This averages out the price of the investments you buy. In months when the markets are down, your investment will buy more units and in months when markets are high, you’ll buy less but profits might be greater.

When you invest regularly, it also reduces the risk of investing a lump sum when prices are overly high and susceptible to a short-term fall. And you’d be surprised at how the value of your drip-fed investments can add up.

You Probably Know All This!

I know that a lot of what I’ve written is obvious but those of you who know me know that I try to keep things simple.  When it comes to your money, the reality is that things don’t have to be that complicated!

At the very least, I hope this serves as a reminder of what you’re doing by investing and why, despite what’s happening in the world at the moment, is still a sensible thing to do with your money.

See you soon…