When Should You Invest in Stocks?

Investing in stocks is a common method for those who are thinking of building wealth in the long term. Utilizing modern technology has made it easy for investors through the development of apps. Despite that, many are still unsure as to when would be the best time to invest.

Maximising returns and minimizing risks can be difficult, as the nature of the stocks are inherently volatile. So when should you actually invest in stocks? Here are some tips that could help you answer that. 

Make informed purchases

Look before you leap is a popular phrase which can be applied here. Understanding the company you are investing in will help smoothen out the entire process. By learning how a company makes its money, decide if their modus operandi aligns with your values and is worth investing in.

You can research the company’s historical performances for certain metrics such as sales, sales growth and Return on Investment (ROI) to get a grasp on how profitable the company would be in the long term. 

Remember, Reaping gains through stock investments is long-term and you need to make sure the company you are investing in has a strong market share, a good business model and most importantly if it could stand the test of time.

Buy and Sell only when you are comfortable with it

Never act on hot-tips or investments that seem too good to be true. Set a price that you are willing to buy or sell at and stick to it! Discipline is the key when making informed investments. A good rule to follow is the 80-20% rule, 80% is for investments that you are confident with and would perform well while 20% goes into risky investments that have you taking chances. 

When selling stocks, while there is no absolute perfect time, ideally you should sell them at your desired Return (after factoring in inflation). This is also after you take into account other factors such as your risk tolerance, time horizon, and financial goals.

It’s a learning process

As you continue investing, you will discover sound strategies and tips on how to approach it. Stock markets constantly change, so keeping yourself updated and always reviewing goals and your investment portfolio will go a long way in making sure your investments bear fruit over-time.

Once an opportunity comes along in the shape of another investment that looks profitable, consider letting go of those stocks that are underperforming or lagging the overall market. The money then could be used towards another investment, which may yield more growth than the previous investment.

Mastering investments in the stock market is challenging, but with time and discipline you will know when to commit to an investment and when not to. Like most things, it’s best to start early and stay consistent with how you approach investing in the stock market. Ultimately, the right time to invest is when you are financially prepared and confident in your strategy.