Q – The markets seem to go in one direction these days – down. Is now the time to invest my money, or should I wait? – Craig R., East York, Ontario
A – There’s actually no “right” answer to that question. When you invest your money in stocks, bonds, or mutual funds, there’s always the temptation to try to increase your return by “timing” the market – that is, trying to buy in at a low or sell out at a high. But I do not recommend that you try to sell in and out of the market in an effort to catch all the highs and lows, because you never will. I do, however, recommend investing at the most opportune time.
There are many factors that come into play when deciding when it is the opportune time. Your objectives, your tolerance for risk over both short and long term, and the time horizon for your investment holdings all play an important role. Inherently, by trying to time the market, you take on more risk than those who invest regularly (i.e., dollar cost average).
A good part of the gains made in the stock market occur in a very short time. If you get it wrong in the short term, you are out of luck. But the person who puts their money in gradually over time smoothes out their purchases through high and low points in the market, thus keeping their average cost lower.
Your financial advisor should be able to help you set up an automatic investment plan. – R.T.
Robyn Thompson, CFP, is the founder of Castlemark Wealth Management, a boutique financial advisory firm, specializing in customized financial, investment, insurance, and retirement planning. Phone 416-828-7159 or email today to firstname.lastname@example.org for a no-obligation, no-charge Castlemark Integrity Financial Planning consultation.
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The foregoing is for general information purposes only and is the opinion of the writer. No guarantee of investment performance is made or implied. It is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice. Please contact the author to discuss your particular circumstances.