When is the Right Time to Invest?

Aug 30, 2023 | Investing, Planning Playbook

With the volatility of investments, when is the right time to invest? Should you delay investing because of negative current events? Should you wait for a pullback in the market? Brad Tatar, Senior Vice President at GreenUp Wealth Management, reviews reasons people delay investing and reasons why you shouldn’t.

Hi, I’m Brad Tatar, Senior Vice President and Wealth Advisor at GreenUp Wealth Management. Most of us recognize the importance of saving and investing for the future. Yet anyone who listens to or watches financial news knows that investments can be volatile. With volatility you may be wondering, when’s the right time to invest?

There is no one-size-fits-all answer to this question. If you’re saving for a short-term goal, it’s not worth the risk of investing in the stock market for a short period of time. But what if you don’t intend to access your investment account for many years? Let’s look at some reasons people delay investing and reasons why you shouldn’t.

Some people delay investing because of negative current events. There were countless periods in history where it seemed like a bad time to invest, such as the Great Depression, Black Monday, the 2008 financial crisis, or the COVID-19 pandemic. While past performance is no guarantee of future results, historically the US stock market has grown in value despite these challenges.

What if your timing’s bad, getting into the market right before it drops in value? Here’s an example. On October 19th, 1987, the S&P 500 Index lost 22.6% of its value. Known as Black Monday, it was the largest one-day percentage decline in the index’s history. If you were unlucky enough to invest in the S&P 500 the day before the market’s worst day ever, you would’ve recovered all of your losses after just 16 months.

Here’s another example. On October 9th, 2007, the S&P 500 Index hit its peak before what’s now called the Great Recession, which was the worst financial crisis since the Great Depression. If you invested money in the S&P 500 that day, your investment would’ve lost half of its value over the next 17 months. But if you held on, your investments would have been up 63% from where you started after 10 years. If you have a long-term horizon, your investments can have time to recover from bad timing.

Some people think they should wait for a pullback in the market to buy in when it’s less expensive. If you wait for a 5% pullback in the S&P 500, you could be waiting a while. Since 1927, the average number of days between 5% pullbacks is 291 days, while the average return between 5% pullbacks is 13.1%. That’s a lot of unnecessary waiting to achieve your goals. Waiting for that pullback not only takes time, it may be a missed opportunity for growth as well.

We recommend you start investing now as long as you are investing in a portfolio customized around your unique long-term goals. The earlier you start, the sooner you may benefit from longterm growth. As Albert Einstein said, “Compound interest is the eighth wonder of the world.”

There will always be excuses to delay investing, but the important reasons, your future goals, are reasons you should go ahead and get started. You and your family deserve it.

I’m Brad Tatar. Thanks for watching.

Author

  • Brad Tatar

    Senior Vice President | Wealth Advisor | Tampa, FL -- For over 15 years, Brad has specialized in working with clients who are in or nearing retirement by taking a holistic view and developing and implementing plans to reach their goals and objectives. Prior to joining GreenUp Wealth Management, Brad served as a managing director for a registered investment advisor as well as having worked for some of the country’s largest broker-dealers. Brad began his career in financial services with Scottrade, Inc. in 2006, where he learned the importance of understanding a client’s needs and developed a passion for providing complex guidance and financial planning. As a Certified Financial Planning candidate, Brad’s expertise is working with clients to review their retirement, insurance, tax, and estate planning needs and creating an investment strategy that aligns with their unique goals. For over 15 years, Brad has specialized in working with clients who are in or nearing retirement by taking a holistic view and developing and implementing plans to reach their goals and objectives.

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