At ELFIN, we are fans of investing. Investing is a way to turn your money into more money and build wealth. So far so good, but “when should I get in? That’s a question we often get from novice investors. And the answer is simple: it doesn’t matter, as long as you start! This may sound strange, but here’s the thing.
Psst: we know the drill ladies! Investing involves risk. You may lose (part of) your deposit. Never invest with money you can’t afford to lose, and if you get started investing: do so deliberately.
Oh yeah, want to briefly refresh your knowledge about investing before you start this article? You can do that here!
Crises and crashes
When the corona crisis erupted in March 2020, financial markets went rock-bottom. But less than a year later, stock markets have already recovered. That’s called volatility. Stock market prices are volatile. Sometimes they drop (hard) and sometimes they rise (even harder). History shows that regardless of declines, increases have always prevailed. On average, historically, it takes about 10 years until the stock market has recovered from a crisis. The fact is. With the corona crisis, recovery took about 9 months. In the infamous 1929 stock market crash, it took 14 years: that is the longest recovery period ever measured.
When to get in
When should I get in? So you can answer that question with: now. The better question to ask yourself is: when will I need my money again? Given what has transpired historically, it is wise to invest for at least 10 years anyway. Might you need your money sooner? Then start saving.
Rules of thumb
Briefly, you can use the following rules of thumb to determine when to invest, and when to save:
–> Can you spare your money for more than 10 years? Then start investing. Do not try to time the market (get in at a good time) because that is an illusion. Unless you have a crystal ball. Time in market beats timing in market!
–> Do you need your money next time (between now and say 2 years)? Then set it aside in a savings account.
–> Invest only with money you can spare anyway. That means: finances in order, sufficient buffer for unexpected setbacks and high debts paid off.
–> Begin! Even if you start with €50: once again “time in market beats timing in market. Did you know that if you invest €50 now, don’t look back at it for 10 years, it will have doubled? Don’t have to do anything, just be in the market. Having your money invested. Find out how here.
Want to learn how to invest wisely and safely? Then check out our shop where we offer courses to make you an
investing boss babe
!
