Often people wonder when they should invest in the stock market or what is the best time to invest? There are many confusions and rumours related to stock marketing, mainly based on peak market. In this article, I will try to answer all your questions. You will also get some tips and tricks related to investment.
Investors often calculate and analyse which time is the best for the investment. Some even say that they are waiting for the downturn and many more such ideas. But investing is so much more vast than that. Let’s see how you should invest in the peak market, what are the important factors related to this, and what mistakes you are making now.
Invest Even in Peak Market
Before starting the article, it is important to know an investment is extremely personal. You should always do proper research before investing. I am only sharing a few trips and trips that will improve your idea about the investment.
Time is Money
If you create the habit of investing on a regular basis despite the price, then it will help you to maintain discipline in the investment. Always remember that the money that sits at your locker is gradually losing its value. Think of it this way, your 100 bucks last year has less value this year, and even less in the next. Therefore it is always better to invest that 100 bucks and let it gain its value in the market.
Regardless of the traditional DCA which suggests bleeding it in, I would recommend you to invest your money in bulk without breaking it into every month. Even a study suggests that the investors who put money in the stock market get 65%- 67% more return than those who invest slowly over time.
One of the main reasons for this suggestion is that the graph’s long term result of the stock market has always been towards positive growth. Therefore, investive your money for a long time would surely provide a better result.
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The Great Recession
We all know about the great recession, so let’s take an example: what would have happened if you instead of your money then?
Assume that you have invested an amount of $10,000 during that time. The market then slowly went down for every successive year. And as the market went down, your hard-earned money also dipped. The $10,000 dipped to a value of $4,000. The market dropped by more than 50%. Ouch!
But you say calm and steady, then after a few years, in 2013, your money started to regain value. After almost ten years, your average annual return would be 4.7%. You can further choose to reinvest the money.
Make Your Money Move
Some people may argue that they have seen the recession when their parents have lost their money and that is why they do not trust Wall Street anymore. It is important to learn from the situation rather than just being afraid of it.
One must learn from the bad situations and then apply it when needed. The people or parents who have invested during the recessions might panic and withdraw their money. Hence their money did not get enough chance to recover later from the market.
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Patience with the right strategy is important. Try to create a disciplined investment habit in the market.
During the Recession – Peak Market
Over the ten years cycle, the market downturn and the investors who invest during this period are most likely to experience two declines.
Therefore on average, if you will invest at the peak just before the recession or downturn and then wait for 10 years. You would surely get an annual return of 7.1% without dividends and around 11.6% after reinvesting.
Hopefully, the article helped to clear all your confusion related to the investment. Try to apply the above tips and tricks while investing. However, make sure to research as much as possible if you are planning to invest. Do not just listen and follow your family and friends because they have a better experience. If you found the article helpful and informative then share it within your circle. Also, read other related articles on our website. Share your thoughts on the above points too.