Skip to main content

Sound Advice: August 23, 2023

What’s the Best Time of Year to Make New Investments

Determining the best time of year to make new investments can be challenging, as it depends on various factors, including your financial goals, risk tolerance, investment horizon, and the specific market conditions.  Here are some general considerations to keep in mind when thinking about the timing of new investments:

1.     Long-Term Perspective: The most crucial factor in investing is having a long-term perspective.  Time in the market is generally more important than trying to time the market.  Historically, the stock market has shown an upward trend over the long run, so staying invested for the long term can be more advantageous than trying to time specific points of entry.

2.     Dollar-Cost Averaging: Rather than investing a lump sum all at once, consider using a dollar-cost averaging approach.  This means investing a fixed amount of money at regular intervals (e.g., monthly or quarterly).  This strategy helps spread out your investments over time and can reduce the impact of market volatility.

3.     Avoid Market Timing: Timing the market is notoriously difficult, even for experienced investors.  Trying to predict short-term market movements can lead to costly mistakes.  Instead, focus on your investment goals, risk tolerance, and asset allocation.

4.     Consider Market Valuations: Although market timing is generally discouraged, it can be helpful to consider market valuations.  If stock valuations are extremely high, it might be prudent to exercise caution.  On the other hand, lower valuations may present better buying opportunities.

5.     Tax Considerations: Depending on your residence and local tax laws, the end of the year might be a good time to consider investments to manage your tax liability, such as contributing to a tax-advantaged retirement account.

6.     Company Earnings and Economic Indicators: Pay attention to corporate earnings reports and economic indicators.  Positive earnings and strong economic data may create a favorable investment environment, but it’s essential to consider them in the context of your overall investment strategy.

7.     Personal Circumstances: Your personal circumstances, such as changes in income, expenses or financial goals, may influence the timing of your investments.  Always ensure that your investment decisions align with your financial plan.

8.     Avoid Emotional Investing: Emotions can influence investment decisions.  Avoid making impulsive decisions based on market news or short-term market movements.  Stick to your investment plan and strategy.

 

The best time to make new investments is when you have a well-thought-out financial plan, a clear understanding of your investment goals, and a long-term perspective.  Rather than trying to time the market, focus on staying disciplined and maintaining a diversified portfolio that aligns with your risk tolerance and investment objectives.

N. Russell Wayne, CFPÒ

Any questions?  Please contact me at nrwayne@soundasset.com

Comments

Post a Comment

Popular posts from this blog

Sound Advice: February 21, 2024

800-000-0000 That’s 800-000-0000 Again, 800-000-0000 That’s the typical closing for the hard sell commercials that are increasingly polluting media airwaves.   These are the commercials for products or services you rarely need or most definitely should avoid. A substantial number are on behalf of groups of attorneys who would have you believe that you and many others may be entitled to cash compensation for having used or being exposed to some evil item or substance some time in the last few decades.   The pitch always includes a comment that there’s no cost to you unless there is a settlement in your favor. Much of this is rubbish, but when the appeal suggests that there’s nothing to lose, why not take a shot.   And, as you would expect, “advisors” are standing by 24/7 to take your call and help get the process in motion.   What kind of advisor would be available at 3 a.m.? One version of this approach pops up every year between October 15 th and Decemb...
Post a Comment
Read more

Sound Advice: September 21, 2022

The Professional Approach To Stock Selection There are various approaches to stock selection, but the two that predominate are fundamental analysis and technical analysis.  Fundamental analysis is a numbers-based method that evaluates key factors such as income and financial health, including the past, present, and future.  Technical analysis emphasizes movements and formations of stock prices. Fundamental analysis is based on factors that over time have proved to have a meaningful impact on stock price movements.  The optimal picture of corporate profitability is steady growth, both in the past and, prospectively, in the coming years.  Steady growth is rewarded by higher valuations of underlying earning power than those accorded companies with erratic progress. When professionals screen (filter) the data of the broad universe of stocks, they look for companies that move ahead every year, regardless of the prevailing economic conditions.  Although high pas...
Post a Comment
Read more

Sound Advice: July 26, 2023

Is Day Trading a Good Idea? Day trading can be both exciting and potentially profitable, but it also comes with significant risks and challenges. Whether it's a good idea depends on several factors, including your financial situation, risk tolerance, time commitment, and knowledge of the markets. Here are some considerations to keep in mind: Risk and volatility: Day trading involves buying and selling securities within a short time frame, often within the same day. This exposes you to the inherent volatility and risks of the market. Prices can fluctuate rapidly, and unexpected events can have a significant impact on stock prices, making it challenging to consistently make profits. Time commitment: Day trading requires a substantial time commitment. It involves closely monitoring market movements, conducting research, and executing trades. It can be stressful and demanding, as you need to be actively engaged in the market during t...
Post a Comment
Read more