That’s a good question as the stock market is notoriously volatile. It can go from all-time highs to all-time lows in just a matter of days and weeks and is heavily linked to the global economy, interest rates, and politics. A single event can cause a ripple effect that moves across the market in unpredictable ways, and can even cause a crash.

If you have your money in the stock market, you’ve probably wondered if you should take it out. And for those who haven’t even started growing an investment portfolio, you’re probably wondering if now is a good time to invest.

All good questions!

Questions I get all the time, my short answer is YES, it’s always a good time to invest.

Why?

Because over the long term it’s the investing that counts not timing markets. Setting up an investment strategy that allows you to invest on a regular basis is key to creating long-term wealth.

Why should you care about long-term wealth?

The wealth you build by investing now is what allows you to live a life of choice. Living a life of choices requires money, right?

Absolutely!!

Let me share some basic investment principles to help you make some critical financial decisions and get over any stock market nerves you may have.

Investing during bear vs bull markets: When is a good time to buy stocks?

Bear markets are periods when the stock market is on a downward trend. This is usually caused by a combination of factors, such as economic recession, political uncertainty, and market saturation.

Bull markets are the opposite of bear markets. They’re periods when the stock market is on an upward trend. They can be caused by positive economic indicators, such as low unemployment rates and high consumer confidence.

So, is now a good time to invest? And more specifically, when is a good time to buy stocks?

Whether you’re in a bear or bull market, the answer is: that it depends.

If you’re a long-term investor, then bear markets present an opportunity to buy stocks at a discount. But in a bull market, this is your chance to buy stocks while they’re on the rise. As you can see, opportunities exist for buyers in all markets.

Up, down, is now a good time to invest in the stock market? The answer?

Despite bear and bull markets, it’s always a good time to invest. In fact, you probably should have invested yesterday. Why? Because every day you invest your money, you’re more likely to earn money on your investments.

That’s because of two factors:

1. The stock market has historically gone up. 

You’ll see over time the stock market has always gone up. This means that even if your portfolio performs badly over the course of a single year and you lose money, you’re likely to gain it back in a few years.

2. The power of compounding

Every time you earn money on your investment, it contributes towards the amount of money you earn interest on, and so on. This is the power of compounding.

Think of it this way;

If you invest $100 in individual stocks and you get a 10% return, you have $110. If you leave that money in the stock market, you not only gained $10, but you will also get a 10% return on that $110, giving you earnings of $121, and so on.

So, is now a good time to buy stocks?

The stock market is unpredictable. Nobody, not even the experts, knows how it will perform tomorrow or the next day.

To answer this, try to understand how stocks work and the likelihood of whether they might go up or down. But if you try to wait until the perfect time to invest, you’ll drive yourself crazy.

You may have heard experts saying ‘buy the dip’ or ‘buy low and sell high.’ This is just another way of people trying to time the market.

The truth is that no one knows if the stock market is going to be at an all-time high or low tomorrow.

Instead of timing the market, you should try to diversify your portfolio in order to get a dollar-cost average when it’s time to retire. Keep in mind that you don’t need a ton of money to invest.

In fact, investing in small amounts can build long-term wealth too!

What is dollar-cost averaging?

There are a number of investing strategies and dollar-cost averaging is one of them. The goal is to reduce the overall volatility of the market on your portfolio.

Dollar-cost averaging or DCA is when the total amount you want to invest is purchased over a certain amount of time to reduce the impact of volatility on your overall portfolio.

The purchase will happen regardless of the stock price and at regular intervals. For example, putting money into your superannuation every month or having a monthly savings plan on your managed fund.

This is also the easiest way of investing, as it doesn’t require you to do a ton of research on various stocks ahead of time.

How does dollar-cost averaging work?

Let’s take the example of an investment in managed funds. If you decide to invest $200 each month, then that will automatically go into whatever fund or investments are in your managed fund every month.

Some months you might buy at a loss. In other months you could buy more stock because the market was down. Either way, the key is that you are investing consistently.

However, if you stop investing when the market is low and then start again when it is high, you will potentially miss out on your portfolio increasing in value.

For example, if you buy shares of a company for $10 a share. Say that the shares start going down to $6 a share and you decide to stop investing. A few months later, let’s say the shares go up to $12.

In this example, you’ve missed out on buying more shares when they were half the price. That is why it’s important to invest on a regular basis.

Consider dollar-cost averaging in your investment strategy

Dollar-cost averaging or DCA is a great strategy if you want to reduce the risk in your portfolio. Of course, there are other strategies and you should always consult with your brokers or a financial advisor before making any decisions.

But if you’re looking for an easy way to invest without having to time the market, then DCA is a great option!

Is now a good time to invest? Key factors to keep in mind

1. Have clear objectives.

It’s important to keep in mind why you are investing in the first place. Is it for retirement? How much do you need to live on during retirement? Are you investing for a short-term goal, like buying a house? And how much cash flow do you require?

Having a clear goal in mind and revisiting those metrics often will help you figure out the best investment strategy for you. It will also keep things in perspective when you’re feeling overwhelmed with the volatility of the market.

2. Understand your risk tolerance

Depending on your age, income, and goals, you may want to have a riskier portfolio. Or maybe you want to err on the side of caution and have a conservative portfolio. Either way, it’s important to know how much risk you want to take. All investments are risky, and some are riskier than others.

If you have a longer time frame, then you can probably afford to take some more risks. But if you’re going to need your money soon, then it probably makes more sense to invest in something with more stable returns, like fixed-income investments such as bonds.

3. Have broad diversification in your investment portfolio

Having a diverse portfolio is another way to protect your portfolio against volatility. For example, you can purchase exchange-traded funds (ETFs) or managed funds that have holdings in a variety of different companies across different sectors.

You can also invest in stocks of foreign companies, or certain geographical areas. What’s important is that you have a mixed portfolio and you don’t hold too much of one stock or sector.

4. Think long-term as you ask yourself, “Is now a good time to invest?”

If you read the headlines on a daily basis, it’s easy to get overwhelmed. Stocks are going to go up and down, sometimes multiple times a day. It’s stressful to watch your portfolio on a daily basis. Instead, remember to think long-term. If you invest, it should be for the long haul. Remember that just because stocks tanked today doesn’t mean you won’t have enough money for retirement.

If history tells us anything, it’s that stocks have a boom-bust cycle.

What goes down eventually comes back up.

So, is now a good time to invest? Sometimes the answer is “No”

While now is always a good time to invest, there may be situations where it is better to wait.

You have no emergency savings.

If you are living paycheck to paycheck to meet your mortgage commitment, you might not want to invest. Instead, focus on building up your emergency fund.

It’s important to have some money saved up for unexpected expenses like replacing a tail light on your car or needing a plumber to fix a leaking toilet. Have at least three to six months of living expenses saved up.

You have high-interest debt and no plan to pay it off

Not all debt is created equal, believe it or not, there is a thing called GOOD DEBT.  But if you have bad debt such as; credit cards, store cards, personal loans, and car loans just to name a few, you need to pay these off ASAP.  Work on paying off that debt before you consider investing in the stock market.

Again, so is now a good time to invest? The answer ultimately is “Yes”

So, is now a good time to buy stocks and invest in the market? Yes.

This is especially true if you’re a woman. Not only is there a gender pay gap but there is also a gender investing gap. While it’s not fair at all, it’s reality.

If you want to become financially stable, it’s time to invest in your future and take advantage of every investment opportunity you can.

Ready to get started?

Check out our Financial Confidence Quiz to get started.

Go on have a go to see where you are now and how you can change your score to start creating your wealth right now!!

Remember, it’s not the wealth so much we care about, it’s the freedom the wealth will allow you to have, so you can live a life of choice.

I’m Tracey Sofra and I believe women should take control of their money and create the financial independence they deserve to live a life of choice.

If you are ready to take the next step in your journey to live a life of choice, take the Financial Confidence Quiz and find out how you score to move forward in your financial life.