The best time to invest in the market is right now. I would tell you the same thing next year and I would have told you the same thing last year. If you read between the lines, the message is very clear, you can’t predict the future and you can’t time the market. Can you get lucky and buy in at just the right time? Sure, it’s possible, but I subscribe to the notion that time in the market beats timing the market. Now that I’ve given you my opinion, let’s talk strategy and action.
Think Long Term
If your looking to get rich quick, you can stop reading now. History has shown time and again that sustained exposure to the market gives you the best chance for success. With that said, any good advisor should provide you with the disclaimer that past performance does not guarantee future results. Identifying your goals and time horizon for your investments is the key to determining your asset allocation. Asset allocation, simply put, is how much of your investment should go toward equities or stock funds versus how much should go toward fixed income options like bonds and cash. Understanding how your investments will hold up to a stressful time in the market, such as corrections or Bear Markets are important but don’t ever let that deter you from investing, instead let’s talk about how to take advantage of those instances.
Dollar-Cost Averaging
If you have a 401(k), 403(b) or SIMPLE IRA where you work, you may not realize it, but you are probably already doing this. Dollar-cost averaging is an investment strategy where you buy the same dollar amount of a specific investment at regular intervals. Each time you make a purchase of that investment you are buying it at different prices depending on market conditions. When the price is low, you purchase more shares and when the price is higher, you purchase less. By employing the dollar-cost averaging strategy, you can ease your concerns about investing a large sum of money at the wrong time. This method has proven to be very effective and efficient inside workplace retirement plans and individual accounts outside of your employer sponsored plan can benefit from this strategy just as well.
When it’s on Sale, Buy it!
Terms like “market crash,” “bull market” and “market correction” often scare investors because it typically means that the value of their investments are declining. But if we go back to the good old history book, it shows that over time the market has rebounded, every time. We educate our clients to view down times in the market just like a sale at their favorite store. If you are willing to buy a product or service at full price, I’m sure you love buying that same product or service when it goes on sale. The same goes for the market and your investments. When it’s on sale, buy it!
Whether you are already invested in the market or looking to get started, we would be happy to discuss your personal financial goals and help you determine the best way to get the results you are looking to achieve. Give us a call at 888.858.5122 or visit us online at www.fhtadvisors.com.
Securities and advisory service offered through Cetera Adviosrs LLC, Member FINRA/SIPC. Freeman Heyne Toma LLC and Cetera Advisors LLC are non affiliated companies.