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Blog | When is the ‘right’ time to invest?

JTB Studios
Private Client Adviser
13 Jan 2021

Have you been waiting on the sidelines and wondering when is the best time to start investing? It’s the age-old question that comes around with every new year, but with COVID-19 still lingering, many investors may be wondering whether now is a good time to invest.

As you think through whether you should invest now, here are some helpful tips to guide you.

Have a plan

One of my favorite quotes in life is “Failing to plan is planning to fail”. Before you jump right in, creating a plan will help you reach your financial goals faster. You want to ensure all your ducks are in a row before you invest. Some things to look at are:

  • Put in place a budget, but more importantly, stick to it!
  • Understand your financial goals
  • Have good control over your debt, particularly the debt that doesn’t serve you (find out more about that HERE)
  • Create a strong financial buffer
  • Understand investment risks and your risk tolerance

Having all these things in place would give you peace of mind to start investing. The earlier you set yourself up for investing, the more time you have to achieve your goals and also benefit from the long-term benefits of compounded earnings.

Time in the market vs timing the market

Most people are tempted to try and time the market – it could be the housing market, the stock market, any market. It is in our nature to try and outsmart everyone else, however, the reality is, it is extremely difficult to do so. I see timing the market equally challenging as trying to win the TattsLotto – the odds are really low and it’s a gamble!

Timing the market also leads to emotional investing which could lead to poor investment decisions such as selling when the market is falling and buying when the market is rising.

One of Warren Buffet’s greatest words of wisdom is about the importance of long-term investing, therefore, time in the market is far more important than timing the market. So, if you’ve been waiting on the sidelines for months and hoping for another dip in the market before you invest, you could be waiting forever.

Invest with an eye on the far horizon

When you invest, it is important to think long term. Another one of Warren Buffet’s best pieces of investment advice is “if you are not prepared to hold a stock for more than 10 years, you should not own it for 10 minutes”. If you are planning to invest in shares or property, take a long-term view, and stay the course. As long as you are investing in a good quality asset, backed by good research, you should find yourself in a good position in the long term. There will always be volatility in the market but it is important to stick to your long-term investment strategy, always.

Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.