Now is the time to start investing in the stock market? | Smart change: personal finance
Should you put your money on the stock market? This is a common question, especially in light of the economic volatility currently resulting from record inflation, a supply chain crisis and the lingering threat of COVID-19.
But there is actually a very simple way to answer this question that applies to anyone who is considering investing, whether it is for the first time or adding to their existing portfolios.
Is Now the Right Time to Start Investing?
Many people assume that the best way to decide whether to invest money in the stock Exchange is to examine the economic conditions and whether the market is currently a Taurus Where bear market. But the reality is that this approach can be wrong.
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You see, it can be very difficult to predict when the market will bottom out and when a recovery will start. Trying to sync the market and buy when stocks are at their lowest could mean you’re missing out on an opportunity to make your money work for you as quickly as possible. Missing even a few key days in the market could have serious consequences, leaving you with that much nest egg. half a million dollars smaller than it could have been.
The reality is, if you invest in strong companies that will stand the test of time – or if you invest in an S&P fund that tracks the performance of the market as a whole – it doesn’t matter when you buy. As long as you are investing for the long term, you will be making money over time. And the sooner you start invest and make your money work for you, more compound growth can help your nest egg grow exponentially.
So how do you decide if it is the right time to invest?
Rather than asking yourself if the Marlet when the time is right, you’ll want to look at your personal financial situation instead. Concretely, you should consider:
- Whether you have an emergency fund: Investing when you don’t have emergency funds could be wrong. When unexpected expenses inevitably arise, you may have to go into debt or sell stocks at an inconvenient time and block losses. It is best to have money set aside for emergencies before putting money on the line.
- Whether you have high interest consumer debt: If you have payday loan debt, credit card debt, or other high interest debt, you could usually get a better return on your money by paying it off rather than investing. This is not the case with low interest rate debt like mortgages and student loans because the return on investment you can get in the market is often higher than the interest rate for these types of loans. debts.
- If you will need the money you invest over the next five years: You’ll want to invest for the long term to reduce your risk by making sure you have time to wait for downturns and stay invested until the inevitable recovery occurs. Therefore, it is not a good idea to put your money in the market unless you can keep it invested for five years or more.
- Whether you have a plan to invest in: You should understand your investment objectives, know your risk tolerance and have a plan to build a diversified portfolio with the voucher asset allocation.
If you can tick these off your list, the right time to put your money in the market is at present so you can start putting your funds to work for you.
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