Buy low, sell high. Everybody knows that is the secret to investing so you can turn a profit. If only it were that simple! Obviously, there is a lot more that goes into it. When is the best time to invest?
One of the keys to investing successfully is knowing when the best time to invest is. And even that is not as simple as picking the best time to do so. It also involves some other criteria besides just what the market is doing.
Your personal and financial situation plays heavily into whether or not you should. There are, of course, tools like investment calculators that can help you along the way, but you do need to be smart about how to invest even if it looks like a good time.
In this article, I will outline some of the things you need to consider before you invest in this bear market.
You have disposable cash
By disposable, I mean two things. One, that you can lose that money and not miss it. If not having that cash will impact you even in a couple of years from now, then it is not actually disposable.
Your investment can lose value as maybe it hasn’t bottomed out yet. In this case, you sell and lose that money, or you hold onto it until the market turns around. If you do sell, then it means that money wasn’t actually disposable. You have to be able to ride it out until you can at least break even, which could take years.
Secondly, even if that money does appreciate, it can take quite a while. A bear market is a great time to buy as the stock prices are low, but it can take years for the market to come back to the point where you will make a profit.
There are lots of incentives
During times when the stock market is falling in record numbers, there are usually going to be some incentives to buy. Besides just the low stock prices, many investing tools and services are offering things like free stocks if you plan on micro-investing.
If you don’t know how to get free stocks, just check with your preferred investing application and see if they offer. Even if the stocks that you buy don’t pan out, you have the possibility of making a few hundred dollars from a stock that is given to you as a bonus for using their services.
Usually, the stocks are from high performing companies and not from an unknown quantity.
Don’t wait for the bottom
There is no way to know when the stock market hits the absolute bottom. That’s why they call it investing and not gambling. Yes, you want to try not to buy when it is too high, but if you wait for it to recover, it may be too late.
If you are ready to invest, meaning you have the extra money and can live without it for a while, then you should go ahead and invest. It may fall further, and it looks like you are losing money, but you only lose if you sell. Hold on as the market will eventually recover.
Featured Image by Gino Crescoli from Pixabay