The Idea Is To Buy Low And Sell High When Investing
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While you are accumulating your funds in the stock market, any number of things could affect it negatively. It is incumbent on you to take specific steps to ensure that you can preserve and accumulate your wealth for the future.
Based on the First Commandment of Investing (covered in detail in a future article) - Buy Low, Sell High - the answer is simply "buy when the price is low". This rule is always worth following. If the market or a stock price are at a new high, it is not a good time to buy. Buy when prices drop, sell when they go up. Like following each of the Ten Commandments of Investing (and the Ten Commandments in The Bible, Torah or Koran) - It is simple, but not easy!
With the Power of Compounding (another future article), the answer is: the sooner the better. Just like the answer to "when is the best time to plant a tree?" (the correct answer is 20 years ago), we can settle for now as being next best. Sir John Templeton says compounding is simply the interest, dividends, or gains you earn on the earnings from prior years. A simple example: if you earn 12% per year (realistic) on an investment of 100, your total after ten years is not 220 (100 + (10 x 12% x 100)), it is 310.6. And that same 100, earning 12% after 50 years, will be worth 28,900. Try the calculations! Each year you earn 12% on not just the principal (original amount) but also the earnings accumulated over the prior years.
Income protection safeguards your retirement fund in two ways: it allows you to continue saving or at least prevents you from unnecessarily depleting your retirement savings. Being unable to work can have a crippling effect on your contributions. Those without insurance are tempted to withdraw from their retirement plans, even if they incur penalties. Income protection safeguards against employment interruptions, which can lead to retirement fund depletion.
Your goals will be determined by your needs; this will be done whether it is by you or your financial advisor. You will need to factor in current income, living expenses, debt, bills, lifestyle, and what goals and dreams you have for your lifestyle after retirement. You will need a certain amount of savings and investments to realize your retirement needs and wants. There should also be a cushion in cases of emergency, illness, death, or any unforeseen circumstances. There is no better time than the present to begin saving for the future. It is necessary to prepare for that and more. You can also factor in what you will be receiving from social security benefits; however, this should be the amount with the least importance. It is rarely enough to live on, and it should be used as part of the extra and cushion factor.
The big lesson from all this? Stop telling yourself that you do not have money to save or invest now, and you will invest a large amount in the future when you are earning more. That is like getting some shade from a tree you plant ten years from now. The Power of Compounding is why I am glad I started investing 35 years ago. When Sir John Templeton was asked this same question many years ago, I recall when he paused and reflected (as he often did) and answered "when you have money." So, whether you decide to wait for a lower price level, invest regularly, start immediately (20 years ago would be better), or wait until you have more money - Happy Investing, and you will be glad you did!
Article Source: Articlelogy.com
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