It might seem like a huge undertaking to begin your investment journey. While it can be a bit intimidating at first, with professional financial advice, it doesn’t have to be. Understanding the fundamentals of investing will help you make better decisions with your money, regardless of how much of it you have, allowing you to reach your goals sooner. Learn more about the fundamentals of growing your money.
This does not constitute advice and advice should be sought in all instances before acting on it.
While there are some fundamentals of investing that are often talked about, such as investing early, investing often, and ensuring your portfolio is diversified, there are additional things to consider as well.
Time in the market matters
When it comes to investing, the key to success is often patience and consistency. Some people who are new to investing and want to capitalise on market conditions might think that ‘timing the market’ is a good idea.
Timing the market means that one tries to predict when prices will rise or drop so you can buy at a low price and sell at a high one, which sounds great — in theory. But in practice, this strategy rarely works out the way an investor hopes. Even if you do strike while the iron is hot and get out at the right time, you will likely miss significant gains when the market rebounds.
The benefits of compounding
What does make a difference is how much time you spend in the market. Even if you only miss a few days in the market, those could end up being the strongest days and missing out on those could have a significant impact on your returns. The best thing to do is ride out the storm, no matter how volatile the market might get. Plus, staying invested over a long period of time means you are able to benefit from compounding returns, which will give your investments more chance to grow.
History proves that stock markets tend to fluctuate wildly in the short-term, but in the long run, they trend upwards. Staying invested and not constantly switching up your investments is less stressful overall. And once you get used to riding out the downturns, you’ll appreciate not having to make decisions in the heat of the moment that could end up costing you massively. Remember – time in the market is more important than timing the market.
Review your portfolio regularly — but don’t go overboard
Of course, it’s good practice to periodically review your portfolio to ensure that your asset mix is still performing well. But if you check your portfolio too frequently, it could feel like the market is more volatile than it actually is. It’s natural to want to check in from time to time to see how your investments are doing, but make sure you are stepping back and looking at your portfolio mix objectively.
It’s important not to get bogged down by the daily volatility the market experiences. Sometimes, a particular asset might be performing erratically but don’t make any rash decisions based on day to day fluctuations; focus on long-term investing goals and conduct your checks with a professional to make the best investment decisions.
Need help navigating the world of investing?
Investing your money is a solid strategy that will help you reach your long-term financial goals. Even during periods of high interest rates, investing will produce better returns than any savings account. Investing will help you grow your money over time, but if you’re not sure where to start, we’re here to help. To get started on the path to achieving your dreams, get in contact with the experts at Dental & Medical Financial Services today.