You probably have heard the old adage -“there are no dumb questions, only dumb answers.” The question “When is the best time to invest?” is no exception when you are invested in the stock market.
It is a very good question that I am often asked. I will not waste your time proposing dumb answers, although I have heard many. And when I hear someone give one of them, I like to ask another question, namely “how much commission do you earn if I follow that advice?” There are in fact four four correct answers to the title question. Now that is getting your money’s worth!
Deciding to borrow or withdraw from your retirement fund is not a fine idea either. Your retirement fund is a long-term endeavor. Retirement planning – and financial planning as well – would normally inform your saving toward that goal. You should not compromise a long-term goal like retirement with short-term needs if you can avoid it. Even if you borrow with the intention of repaying, this often does not happen – particularly if you do not properly plan your finances.
Income protection is only one aspect of financial protection. Inadequate homeowners’ insurance or unanticipated medical expenses might easily leave you scrambling for funds. It is easy to look toward your retirement portfolio for rescue, as it has accumulated wealth. Adequate insurance for risks that you face is a good way to reduce or cover the costs associated with these risks, should they occur. Financial protection preserves the integrity of your retirement portfolio. Getting the most out of your retirement plan is difficult enough when you are doing it on your own. If you are part of an employer-sponsored plan, you can boost your funds easily when you have your employer match your contributions. This boost to part of your accumulated savings can compensate for risks in other areas of your retirement portfolio. In some cases, you get a 100% return on investment up to a stipulated amount.
You should not invest your entire retirement fund in one asset class, nor should you be too conservative or take unnecessary risks. Portfolio diversification ensures that you are neither too conservative nor too adventurous. Investment risks can handicap or cripple your wealth accumulation for retirement. Portfolio diversification prevents you from risking the partial or total loss of the real or nominal value of your retirement fund. There is nothing worse than building your future – only to see it collapse. Your retirement fund is your investment in the future. You should do all that you can, while it is accumulating, to protect it in the present.
The big lesson from all this? Stop telling yourself that you do not have money to save or invest now, and you will invest a large amount in the future when you are earning more. That is like getting some shade from a tree you plant ten years from now. The Power of Compounding is why I am glad I started investing 35 years ago. When Sir John Templeton was asked this same question many years ago, I recall when he paused and reflected (as he often did) and answered “when you have money.” So, whether you decide to wait for a lower price level, invest regularly, start immediately (20 years ago would be better), or wait until you have more money – Happy Investing, and you will be glad you did!
Visit the source at: http://www.prlog.org/10761544-time-the-stock-market-with-research-in-motion.html. Unique version for reprint here: Early Retirement Is Not Possible With Your Investments.