In our quest for financial independence, it’s not a secret that we have started investing our money. Just like any other millennial couples we also asked the big question – “when is the best time to invest?”
Registered Financial Planner Randell Tiongson said “the best time to invest was yesterday, the next best time is today, and the worst time is tomorrow.” Others would say that the best time to invest is when you have money.
Based on our experience, I would say that the best time to invest is WHEN YOU ARE READY.
You shouldn’t just invest immediately because you regret that you missed your chance yesterday. Just because you have an extra money today doesn’t automatically mean you should open a trading account. You shouldn’t buy shares just because your friend told you that the stock market is going well.
Here are some of the questions to ask yourself to decide if you are ready to invest:
- Have you understood the basic concepts of investing? Legendary investor Warren Buffett defines investing as the process of laying out money now to receive more money in the future. This just means that it will take time to reap your success.
- Have you done a little research about the investment type which you prefer? There are different options where you can invest your money like stocks, mutual fund, variable life insurance and many more. (To give you an idea, you may ready my article on simple investment guide for millennials here)
- Do you have a reliable friend (or financial advisor would be better) who can guide you on your investment? For beginners, doing research is good but having also someone who’s knowledgable in investing will help you invest your money better.
- Do you have enough savings and emergency fund? Savings and emergency fund is different. Emergency fund is the money you set aside which you can use in case you experience a financial dilemma (job loss, hospitalization). Recommended emergency fund could be 1-3 months worth of your salary.
- Are you ready to risk? The last but the most important question you need to ask yourself is your readiness to take risks. Investing is different from savings. There’s no 100% guarantee of how much money you can get in return.
If you still have uncertainties on some of the questions, don’t rush yourself. If you answered ‘yes’ in the five questions, congratulations! You’re already prepared to invest.
There’s no perfect timeline for investing. The only best time to invest is when you’re ready. It’s better to be financially and psychologically ready rather than go to the battle unequipped.