Is NOW the right time?

Phil Hendry20/04/2021

Is It A Good Time To Invest?
3 Ways To Understand If It’s The Right Time FOR YOU

This is a pretty common question we hear from people and one I really wish we had a definitive answer to!  Its usually asked in the context of whether investment or property markets look like a good place to be entering, given recent performance.

Unfortunately, nobody knows the answer to this – when is the right time? It fits into our desire as human beings to be in control.  So in this instance, we want to know that it’s the right time to invest before taking the plunge. But it is this uncertainty that is the price you pay for getting returns over and above the measly returns on offer with cash.

Anyone who tells you definitively it’s the perfect time to invest is just flat out lying to you. Obviously, there are signals which help arrive at a calculated decision. Those that were brave enough to invest in the turmoil last March and April will have done very well. But that is easy to say with hindsight, what would you actually have thought and done at the time?  Significant drawdowns from market peaks do provide great opportunities, as you know you are significantly below where the market has been for example. It’s whether or not you have the fortitude to go for it which is the real test!

It’s all about timing. Isn’t it?

I think we need to accept that picking the perfect timing, in general, is impossible. There are exceptions, but it’s likely just been luck. Also, look back to 2016, I don’t think anyone would have initially thought Brexit or Donald Trump becoming POTUS would have been good for UK or US markets…but they finished on record highs that year…go figure.

right time

Don’t allow your investments to be caught sleeping!

Our view, therefore, is to focus more on what you need to achieve when investing, therefore here are 4 reasons it could be good timing FOR YOU:

Your cash is not growing adequately

This is a given just now, considering where interest rates are now.  Where you have ample cash set aside for emergencies (say 3-6 months expenditure), investing the balance over this is the right call…because investing in other riskier assets is the only way to grow the money at a rate you deserve. This in turn really expands the options you have to enhance your lifestyle over time.

You know you don’t need this cash for 5 years +

This is one of the most important factors, and should it be the case, it relieves concern about timing.  The premise behind this is that if you have enough time to ride out short term market drops, your timing in terms of when you initially invest is much less of a problem. Generally speaking, a minimum of a 5-year investment term, gives the best chance to be very unfortunate in terms of timing entering the markets, but still experience positive returns over the full period.

A great example of this is something we have just lived through during Covid.  The unusual element being just how quickly the markets dropped but then recovered fully. The MSCI World index is an index that tracks a collection of the worlds biggest companies. From its high in February last year, at one point it had dropped almost 30%, but by the end of 2021, it was up 12.32%. This demonstrates another important example of why trying to time markets is silly, as the tendency is to react and leave the markets during turbulence for safety, but this shows you are better to ride it out.

You are happy to diversify

Diversifying is an excellent way to reduce risk and issues with timing.  Diversification across different assets and regions makes timing much less of concern, when we aren’t talking about global health, economic or political issues, which generally impact everyone.

Yes, positive news in the short term could pay off handsomely when investing in a very small collection of assets, just look at Tesla or Bitcoin, everyone’s favourite investment tips!  But as has happened on a few occasions, these things can drop in value 15-20% in a day! Is possible upside really a price worth paying to see your savings drop that much in a day, and is this really commensurate with a pot of money that could be there to fund your lifestyle for 30+ years?

Better to diversify properly, it may well take potential upside away, but it gives a far more reliable outcome for you in the future.

Do you have any other choice?!

If you want to enjoy a certain lifestyle at some stage, and or stop working, investing what you save is essential. With the cost of living outstripping most cash rates, and the increasing costs of things like care and school fees actually well ahead of published inflation, you really have to invest!
Let’s take the average salary in the UK, £38,600. Now let’s assume for example someone is lucky to start on this salary at age 20. They then save 10% of their salary per annum after tax…which is good going!  Then let’s say you are able to maintain this until age 65…this leaves you with £173,700 assuming no growth. That is obviously 4.5 x your finishing salary. When you are entirely likely to live 20+ years in retirement, hopefully, longer, this won’t go very far!

Investing as you save is essential (where you don’t need money in the short term), to give the best chance of a lifestyle you deserve.

So is timing really the biggest issue here, or is it really more to do with starting to save and invest at all? There’s always a right time to start investing!


I am sorry these are not anything to do with a prediction of the next market crash or surge! But the point is to recognise that these predictions are ultimately a red herring. Focus on if the timing is right FOR YOU, and the best decision you can make is to ignore any guesswork and stay invested for the long haul.