Whether considering investing in markets or buying a house, we all worry that perhaps it’s not the right time.
Coutts private bank believe it’s not about finding the perfect moment amid the highs and lows of markets. It’s about investing in high quality, good value assets that will help preserve and potentially grow your wealth in the medium to long term and for future generations.
Many people try to catch that perfect moment to invest, just after markets have fallen but before they begin to rise again. This is what professional investors call ‘timing the market’. But in practice it is extremely difficult to do. Coutts believe that good investment is about time in the market, rather than timing the market.
Trying to time the market can lead to missed opportunities. For example, the S&P 500 index has consistently hit record highs over the last seven years. As it has risen over that period, people thinking about the perfect moment to pitch in might understandably have been reluctant, thinking that what goes up must come down and the rally would have to end sometime.
This is a particularly stark example of the principle at work, but the same effect can be seen over different markets in different timelines. Getting the inflexion point right is largely a matter of luck rather than design.
In the meantime, holding on to your cash in the hope of buying at the optimum moment means you could potentially miss out on investment growth. An extended rise over the last few years does not mean you can rely on it continuing, but nor does it make a fall inevitable. Past performance should not be seen as a guide to future performance and not be relied on as such.
Overall, when it comes to missing out on investment growth, timing is less of an issue than not being invested at all. The timing you should consider is the time that’s right for you remembering that the markets can go down as well as up.
Whether looking to buy a property for your own occupation or as an investment, contact Connell Property Consultancy to find out how we can help.